Berger Paints (BRGR) reported better than expected result. BRGR continues to grow at fastest rate compared to competition in decorative coating business. Also, as industrial coating business (c. 18% of revenue) was relatively un-impacted due to lockdown, it contributed more towards revenue recovery.

Value growth was higher than volume growth due to price hikes and better revenue mix. BRGR has taken price hikes during the month of May-June'21 followed by further hikes in Jul-Aug'21. However, significant pressure from increase in raw material price (crude and monomer) led to sharp contraction in gross margin albeit lower than competition.

Commenting on the result review, IDBI Capital Equity Research said, "BRGR will continue to focus on tier 2-3 cities to drive topline growth. Water proofing business is tracking well. Based on revised business outlook; we have revised our EPS estimates upwards by c. 2% in FY22-23E. We upgrade our multiple to 65X. Our revised TP stands at Rs 757 with 'Hold' rating." 

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