Berger Paints

After Berger Paints declared its numbers for Q3FY13, the stock hit a new 52-week high at Rs.189.15 and the numbers were indeed exuberant. Despite a 15% YoY (22% on QoQ) rise in raw material costs and 44% rise in tax outgo (37% on QoQ), the company ended the quarter with a 57% jump in consolidated net profit at Rs.77 crore. Sequentially, it was up 45%. This strong growth in bottomline was only on the back of very strong topline. Net sales rose 17% (13% on QoQ) at Rs.917 crore and this alone helped shore up the net profit.  The company’s strategic shift from industrial to decorative paints during the quarter helped growth.

Volume growth was marked in double digits and in Q4 too, it could be decorative which will drive. Industrila paints growth is down to slowdown in infra and automobile sector, its two biggest clients. There were rumours of the company taking over Shalimar Paints but the company issued a statement denying these rumours but it remains open to acquisitions for better inorganic growth. In terms of market share in industrial paints, Asian Paints is clearly the leader, followed by Berger, third place is help by Kansai Nerolac and AkzoNoble comes in at fourth. For 9MFY13, the company has already notched up a net profit at Rs.174 crore v/s Rs.180 crore for FY12. Clearly, even if Q4 gets to be a lean period, its numbers for FY13 will surpass that of FY12. Annualised EPS of this Rs.2 face value stock stands at Rs.6.72.