Berger Paints India Ltd saw its shares fall by over 1% on Friday, trading at ₹544.75 in early hours, despite reporting a year-on-year (YoY) increase of 33% in consolidated net profit at ₹292 crore for the third quarter. The company's revenue rose by 3% to ₹2767 crore, and its EBITDA stood at ₹473.65 crore, marking a 30.4% YoY growth. However, the stock remained almost flat post-announcement at ₹548.95.
The paint company's operating profit grew by 26.7% for the quarter and its market share in India increased to over 20% by the end of H1FY24. This growth was achieved through aggressive distribution expansion and innovation, despite an inferior mix impacting value growth and weak demand for decorative paints. The soft raw material prices supported this growth, improving gross margin.
The management expressed confidence in maintaining double-digit growth and similar EBITDA margins in the third quarter. However, analyst ratings varied significantly. Morgan Stanley downgraded the stock to 'Underweight' and reduced its target price to ₹479 due to missed Q2 estimates, while Macquarie gave an 'Underperform' rating with a target price of ₹505.
On a more positive note, HSBC recommended a buy rating with a raised target price of ₹650, citing the company's impressive volume growth and improved gross margin as key drivers.
InvestingPro Insights
Based on real-time data from InvestingPro, Berger Paints India Ltd, coded as BRGR, has shown promising signs that could interest investors. The company has consistently increased its earnings per share, a positive sign for potential investors looking for companies with steady growth. Moreover, BRGR has been successful in maintaining dividend payments for an impressive 28 consecutive years, reflecting its commitment to shareholder returns.
InvestingPro Tips highlight that BRGR operates with a high return on assets, indicating efficient management and effective use of its resources. Additionally, the company has been a prominent player in the Chemicals industry, which could be a contributing factor to its strong performance.
In the vast library of InvestingPro, there are over 18 additional tips related to BRGR, which could further guide investment decisions and strategies. These tips are part of the premium InvestingPro package, offering in-depth insights into various companies and industries.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.