Berger Paints India reported a bigger-than-expected drop in second-quarter profit on Tuesday, as above-average rainfall and price hikes dampened demand.
The company’s consolidated net profit fell 7.5% to 2.70 billion rupees (about $32 million) in the July-September quarter, lower than analysts’ estimate of 2.84 billion rupees, per data compiled by LSEG.
Revenue from operations rose 0.3% to 27.75 billion rupees, lagging behind analysts’ expectations of 28.37 billion rupees.
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KEY CONTEXT
Paint makers, including Berger, hiked prices by up to 2.5% in the second quarter as domestic competition intensified with Grasim Industries entering the sector earlier this year.
India also saw higher-than-normal rainfall, which lashed Berger’s key markets including Andhra Pradesh, Kerala and West Bengal, resulting in flooding and lacklustre sales.
The company, India’s second-largest paint maker by market capitalisation, is the first among its peers to report second-quarter results.
Kansai Nerolac, Akzo Nobel India and market leader Asian Paints are set to report results later this week.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth (%) rating* analyst price yield
s target** (%)
Berger Paints India 48.39 30.50 8.59 7.22 Sell 19 1.03 0.65
Asian Paints 52.89 36.07 7.53 1.53 Hold 34 1.02 1.13
Kansai Nerolac 29.61 18.95 7.60 18.80 Hold 11 0.89 0.88
Paints
Indigo Paints 46.18 27.22 14.84 12.92 Buy 6 1.05 0.21
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPTEMBER STOCK PERFORMANCE
— All data from LSEG IBES
— $1 = 84.0660 Indian rupees
(Reporting by Hritam Mukherjee and Manvi Pant in Bengaluru; Editing by Sumana Nandy)
