Berger Paints India, one of the leading paint manufacturing companies, reported a 51.21% rise in its consolidated net profit to Rs 2,749.8 million for the quarter-ended December. The company had posted a net profit of Rs 1,818.5 million for the corresponding period of the previous fiscal.

Net sales of the company grew 24.90% to Rs 21,181.9 million for the quarter compared to Rs  16,958.7 million for the same period a year ago.

EBIDTA ( excluding other income) for the quarter ended December 2020 was Rs. 4,150 million as against Rs. 2,963 million in the corresponding quarter of the last year representing a growth of 40.1% over the corresponding period of last year.

Total expenses increased 20.84% to Rs 17,649.4 million for the quarter compared to Rs  14,605.2 million for the same period a year ago.

Commenting on the result review, the broking firm IDBI Capital said, "Berger Paints (BRGR) reported better than expected result. Volume growth in decorative remained strong at 32% YoY (vs 17% in 2QFY21). In industrial coating business; general and auto coatings witnessed significant recovery while protective and infrastructure coatings business grew at modest rate.

Positively, demand momentum has continued in Jan'21. Metro and tier 1 witnessed significant recovery while strong demand momentum in tier 3-4 cities has sustained. Subsidiary performance continued to positively surprise with strong double digit revenue growth (+32%YoY). Benign raw material, low cost inventory and formulation changes contributed towards margin expansion.

We have revised our EPS estimates for FY21E by 9% driven by better than expected recovery in industrial coating and strong growth in decorative business. However, due to expensive valuation we maintain our Sell rating on the stock with TP of Rs 523 (50x FY23E EPS as per DDM)."  

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