Berger Paints Q2 Review - Premium Valuation Unjustified: ICICI Securities
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ICICI Securities Report
Berger Paints India Ltd.’s revenue growth (27.7%) was lower than market leader Asian Paints Ltd.'s revenue growth of (32.6%). However, Berger Paints reported least Ebitda margin decline (333 basis points) amongst its peers Asian Paints (1090 bps), Kansai Nerolac Paints Ltd. (937 bps) and Indigo Paints Ltd. (690 bps).
We believe key reasons were likely higher price hikes than market leader and lower ad-spend. While we remain structurally positive on-
Berger Paints’ strong positioning in value-for-money paints,
established distribution network especially in East India,
aggressive growth strategy and innovation and
high probability of market share gains in ancillary segments such as waterproofing and putty, we believe the premium valuations are unjustified (78 times FY23E).
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