Berger Paints

This is the second largest company in the decorative paints market with a 17% market share and it posted a set of good numbers for Q1FY14. Considering the fact that Q1 is not exactly the best season for the company, the 12% (YoY) rise in net sales at Rs.904 crore and 11% rise in net profit at Rs.49 crore is good. EBITDA was at Rs.90 crore ,up 17%. Decorative paint accounts for 75% of Berger's sales while industrial paint contributes the balance.

The company is expanding big time. Its plant at Hindpur at Andhra Pradesh in the first phase will manufacture 8000 tonne per month which will be eventually scaled up to 2000 tonne per month. It is also putting up a unit in Pune too which is expected to go on stream by 2014. The company aims to increase its market share by another 4% over the next 3 years. Till date the company has been focusing on economy and mid range but now it has moved into the higher margin, premium segment in the emulsion range. This is expected to improve its market share and give it a better foothold in the decorative paint segment. The company has a capex of Rs.150-175 crore in FY14. Q2 is also seasonally weak. Second half is expected to be much better.