Berger Paints India (Berger) is the second largest decorative paint company in India. Company has an overall paint industry market share of ~17%.
Company Description
Berger Paints India Limited is a paint manufacturing company. The Company's products consist of interior wall coatings, exterior wall coatings, and metal and wood paints. Berger Paints India Limited was founded in 1760 and is headquartered in Kolkata, India
Investment Arguments
~Lucrative Industry Outlook
~Capacity addition plans help to enhance sales
~Less vulnerable to increase in raw materials prices
~Increasing their Presence
~ Valuations
Going forward, we expect Berger to maintain the good growth momentum on the back of additional capacity along with new product offerings in premium segment and its expansion plans in south region. At CMP of 108 stock is quoting around 18x and 16x for FY 12e & FY 13e. We recommend to buy the stock at CMP for 12-15 months horizon for a target price of 130 (19.19x FY13E EPS of 6.78), giving an upside of 20% from current price.
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