Berger Paints bonus issue, Q1 results: Share price targets, analyst views & more
Berger Paints: While earnings are likely to be healthy at 27 per cent compounded annually over FY23-FY25, Nirmal Bang said valuation are expensive at 49 times FY25 expected earnings per share
- Aug 10, 2023,
- Updated Aug 10, 2023 12:01 PM IST
Berger Paints largely reported an in line numbers but lower other expenses led to a significant beat on Ebitda and profit estimates. The management has guided for double-digit top line growth and 17-18 per cent operating margin for FY24 while announcing a bonus issue in 1:5 ratio. That said analysts see upside capped for the stock.
While earnings are likely to be healthy at 27 per cent compounded annually over FY23-FY25, Nirmal Bang said valuation are expensive at 49 times FY25 expected earnings per share, especially with return ratios in mid-twenties. This brokerage has a target of Rs 670 on the stock, suggesting a 4 per cent potential downside.
"While management commentary continues to remain positive, increased competitive intensity from new & existing players and its likely impact on realisations & volume remain key monitorables in the short to medium term," it said.
Nuvama Institutional Equities said it liked 11.4 per cent growth in decorative business, which was ahead of the industry. Overall, volumes grew 12.7 per cent YoY, in spite of a very high base, it said adding that innovative products like Anti Dust, Easy Clean, Longlife and PU enamel performed exceedingly well.
What it did not like was deceleration in Powder Coatings business due to high base effect and downturn in fan industry. It sees the segment to do better in the September quarter. Nepal operations underperformed due to country specific issues such as inflation and high interest rates.
Also read: Hot stocks on August 10, 2023: Berger Paints, Suzlon Energy, ION Exchange, IRCON and more
"Berger has no intention to get into other categories apart from paints and waterproofing. It expects double-digit revenue growth in FY24, as the demand outlook remains good, in view of positive monsoon progress, infrastructure spends and extended festive season. Since Diwali is delayed, higher growth rate in Q3FY24 is expected. Growth rate in Q2FY24 is expected to be similar to Q1FY24," it said while suggesting a price target of Rs 720 on the stock.
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Berger Paints largely reported an in line numbers but lower other expenses led to a significant beat on Ebitda and profit estimates. The management has guided for double-digit top line growth and 17-18 per cent operating margin for FY24 while announcing a bonus issue in 1:5 ratio. That said analysts see upside capped for the stock.
While earnings are likely to be healthy at 27 per cent compounded annually over FY23-FY25, Nirmal Bang said valuation are expensive at 49 times FY25 expected earnings per share, especially with return ratios in mid-twenties. This brokerage has a target of Rs 670 on the stock, suggesting a 4 per cent potential downside.
"While management commentary continues to remain positive, increased competitive intensity from new & existing players and its likely impact on realisations & volume remain key monitorables in the short to medium term," it said.
Nuvama Institutional Equities said it liked 11.4 per cent growth in decorative business, which was ahead of the industry. Overall, volumes grew 12.7 per cent YoY, in spite of a very high base, it said adding that innovative products like Anti Dust, Easy Clean, Longlife and PU enamel performed exceedingly well.
What it did not like was deceleration in Powder Coatings business due to high base effect and downturn in fan industry. It sees the segment to do better in the September quarter. Nepal operations underperformed due to country specific issues such as inflation and high interest rates.
Also read: Hot stocks on August 10, 2023: Berger Paints, Suzlon Energy, ION Exchange, IRCON and more
"Berger has no intention to get into other categories apart from paints and waterproofing. It expects double-digit revenue growth in FY24, as the demand outlook remains good, in view of positive monsoon progress, infrastructure spends and extended festive season. Since Diwali is delayed, higher growth rate in Q3FY24 is expected. Growth rate in Q2FY24 is expected to be similar to Q1FY24," it said while suggesting a price target of Rs 720 on the stock.
Also read: SAIL, Apollo Hospital, Hindustan Aeronautics: How should you trade these stocks
Also read: IRCON shares rise 92% in six months, hit record high; can the rally continue?