BERGER PAINTS INDIA LTD

( BERGEPAINT | 509480 )
INR 675
52 Week (High - INR 710.30 & Low - INR 527.15)

About the Company

Berger Paints Ltd is an Indian multinational paint company, based in Kolkata. This company has 16 manufacturing units in
India, 2 in Nepal, 1 each in Poland and Russia. It has manufacturing units at Howrah and Rishra, Arinso, Taloja, Naltoli, Goa,
Devla, Hindupur, Jejuri, Jammu, Puducherry and Udyognagar. The company has presence in five countries – India, Russia,
Poland, Nepal and Bangladesh. It has an employee strength of over 3,600 and a countrywide distribution network of more

Financial Summary

Revenues (Crs.) Net Profit (Crs.) Total Assets (Crs.)

₹ 7,589
₹ 10,568 ₹ 833 ₹ 859 ₹ 6,565
₹ 8,762 ₹ 720
₹ 658 ₹ 5,409
₹ 6,818 ₹ 4,728
₹ 6,366

2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023

Return On Equity (%) Return on Assets (%) Financial Leverage

1.8527
25.78% 13.91% 13.31%
23.84% 12.69%
22.80% 11.32%
20.41%

1.8025
1.7976
1.7918

2020 2021 2022 2023 2020 2021 2022 2023 2020 2021 2022 2023

Recent Updates

• Kolkata-based Berger Paints today reported a 20.5% on-year decline in its consolidated net profit for the
December quarter to Rs 201.17 crore . Its revenue rose 5.6% YoY to Rs 2,693.59 crore in the quarter.
• The company's EBITDA for the quarter was Rs 349.65 crore as against Rs 392.11 crore in the corresponding
quarter of last year, representing a decline of 10.83%.
• It is expecting revenues to double to about `20,000 crore in the next five years, led by an overall growth in its
paints business. The company has also earmarked a capex of about `400 crore for FY24.
• “It has posted `10,560 crore in revenues in FY23. It has been posting a CAGR of 15% for the past 22 years, and
that during the last three years has been in excess of 18%.

Page 1
Dupoint Analysis - Return on Equity & Return on Asset

Return on Equity (ROE)

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 460.8 494.3 657.8 719.8 832.8 859.4
Average Shareholder Equity 2,048.0 2,319.2 2,552.0 3,018.5 3,651.9 4,210.6
Return on Equity 22.50% 21.31% 25.78% 23.84% 22.80% 20.41%

ROE - Dupoint Equation

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 460.8 494.3 657.8 719.8 832.8 859.4
Revenue 5,165.7 6,061.9 6,365.8 6,817.6 8,761.8 10,567.8
Net Profit Margin (A) 8.92% 8.15% 10.33% 10.56% 9.51% 8.13%

Revenue 5,165.7 6,061.9 6,365.8 6,817.6 8,761.8 10,567.8

Average Total Asset 3,691.1 4,249.7 4,728.1 5,408.6 6,564.6 7,589.3
Asset Turnover Ratio (B) 1.4x 1.4x 1.3x 1.3x 1.3x 1.4x

Average Total Asset 3,691.1 4,249.7 4,728.1 5,408.6 6,564.6 7,589.3

Average Shareholder Equity 2,048.0 2,319.2 2,552.0 3,018.5 3,651.9 4,210.6
Equity Multiplier (C) 1.802x 1.832x 1.853x 1.792x 1.798x 1.802x

Return on Equity (A*B*C) 22.50% 21.31% 25.78% 23.84% 22.80% 20.41%

Return on Assets (ROA)

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 460.8 494.3 657.8 719.8 832.8 859.4
Average Total Assets 3,691.1 4,249.7 4,728.1 5,408.6 6,564.6 7,589.3
Return on Assets 12.48% 11.63% 13.91% 13.31% 12.69% 11.32%

ROA - Dupoint Equation

Mar-18 Mar-19 Mar-20 Mar-21 Mar-22 Mar-23
Net Profit 460.8 494.3 657.8 719.8 832.8 859.4
Revenue 5,165.7 6,061.9 6,365.8 6,817.6 8,761.8 10,567.8
Net Profit Margin (A) 8.92% 8.15% 10.33% 10.56% 9.51% 8.13%

Revenue 5,165.7 6,061.9 6,365.8 6,817.6 8,761.8 10,567.8

Average Total Asset 3,691.1 4,249.7 4,728.1 5,408.6 6,564.6 7,589.3
Asset Turnover Ratio (B) 1.4x 1.4x 1.3x 1.3x 1.3x 1.4x

Return on Assets 12.48% 11.63% 13.91% 13.31% 12.69% 11.32%

Dupoint Summary
• ROE of Berger Paints has been decreasing form the year 2020 due to decrease in net profit margin which may
be due to increase in other operating cost and fluctuating gross profit margins.
• It also made a low of 21.31% on covid period but dramastically increase in year 2020 due to decrease in
effective tax rate but as time passes its operating expenses increased.
• Return on Assets has also increased in year 2020 and reached to 13.91% but consistently decreasing and
reached to 11.32% in last year. This is mainly due to decrease in net profit margin which may be due to
pricing strategy or increase in operating expenses.

Page 2
Calculation of PV of FCFF Mar-23 A Mar-24 F Mar-25 F Mar-26 F Mar-27 F Mar-28 F

EBIT 1,210.0 1,476.9 1,802.6 2,200.2 2,685.5 3,277.9

Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
EBIT(1-t) 907.5 1,107.7 1,352.0 1,650.2 2,014.1 2,458.4
Less: Reinvestment Rate 85.51% 85.51% 85.51% 85.51% 85.51% 85.51%
Free Cash Flow to Firm(FCFF) 131.5 160.5 195.9 239.1 291.9 356.2
Mid Year Convention 0.5 1.5 2.5 3.5 4.5
Discounting Factor 0.936 0.819 0.717 0.628 0.550
PV of FCFF 150.2 160.5 171.5 183.3 195.9

Expected Growth 22.06%

Terminal Growth 5.38%
WACC 14.21%

Calculation of Terminal Value Sensitivity Analysis for Equity Value per Share
31.3 12.00% 14.21% 16.00% 18.00%
FCFF(n+1) 434.8 3.00% 30.8 25.4 22.4 19.9
WACC 14.21% 4.00% 34.2 27.6 24.0 21.1
Terminal Growth Rate 5.38% 5.38% 40.6 31.3 26.6 23.0
6.00% 44.5 33.4 28.1 24.0
Terminal Value 4,924.0 7.00% 52.7 37.6 30.8 25.8

Calculation of Equity Value per Share Football Field Analysis - Valuation

900.00
PV of FCFF 861.4 ₹ 710.30
PV of Terminal Value 2,708.0 700.00
₹ 473.34
Value of Operating Assets 3,569.5 500.00
₹ 527.15
300.00
Add: Cash 244.7 ₹ 353.02
₹ 37.60 ₹ 52.68
₹ 25.84
Less: Debt 768.0 100.00
Value of Equity 3,046.1 -100.00 ₹ 19.88 ₹ 25.42 ₹ 30.81
No of Shares 97.2
-300.00
Comps DCF Bear DCF Base DCF Bull 52W H/L
Equity Value Per share 31.3

Share Price 675

Discount/Premium 21.54x
Book Value Per Share 46.2

Page 3
Date Adj Close Return
Sorted Return Replication Simulated Returns Calculation of Value at Risk - BERGER PAINTS INDIA LTD (Simulation)
14-Jul-03 1.46 -0.91 0.83 1 -0.034368757
28-Jul-05 15.83 20.65 0.39 2 0.04783496 Historical Approach
12-Jul-02 0.73 -0.88 0.29 3 -0.010128176 Mean 0.17%
27-Aug-04 6.32 -0.68 0.21 4 -0.001617998 Std Deviation 2.82%
12-Dec-07 19.53 -0.07 0.20 5 0.032055069 Min -29.34%
1-Sep-09 21.05 5.05 0.20 6 0.041355366 Max 83.33%
6-Jan-04 3.48 -0.74 0.19 7 0.041264058 CMP 675.0
20-Apr-09 13.42 5.73 0.19 8 0.00080333
8-Sep-03 1.99 -0.88 0.15 9 0.026132187 Monte Carlo Simulation
3-Jul-07 17.25 -0.54 0.15 10 -0.028117288 Mean 0.17%
15-Sep-10 37.30 2.32 0.15 11 0.013058908 Std Deviation 2.82%
14-Jun-05 11.23 1.59 0.15 12 -0.03251134 Min -10.31%
13-Jul-04 4.34 -0.40 0.14 13 -0.001233232 Max 11.85%
30-Aug-04 7.23 -0.18 0.14 14 -0.012780827 CMP 675.0
22-Apr-05 8.84 0.14 0.14 15 0.04567152
31-Jan-05 7.73 0.88 0.14 16 0.030549455 Percentile Confidence VAR% Stock Price VAR(INR)
8-Mar-04 4.11 -0.79 0.13 17 0.00513251 5.00% 95.00% -4.43% 704.9 -29.9
26-Dec-07 19.89 0.18 0.13 18 0.028255388 1.00% 99.00% -6.30% 717.5 -42.5
27-Mar-06 16.85 -0.89 0.13 19 -0.005963469 0.50% 99.50% -6.98% 722.1 -47.1
1-Dec-14 149.94 10.20 0.12 20 0.008073832 10% 90.00% -3.42% 698.1 -23.1
21-Apr-08 13.38 -0.91 0.12 21 0.04333627
2-Jan-15 153.92 -0.66 0.12 22 0.042470709
20-Mar-20 446.90 13.21 0.12 23 -0.024281479
30-Nov-10 31.44 46.31 0.11 24 -0.016995788
6-May-03 0.66 0.00 0.11 25 0.012680707
10-Apr-03 0.66 0.00 0.11 26 -0.026353675
21-Feb-03 0.66 0.00 0.11 27 0.026649905
12-Feb-03 0.66 0.00 0.11 28 -0.004218883
28-Jan-03 0.66 0.00 0.11 29 -0.013385554

Page 4
Date Adj Close Return Sorted Return
14-Jul-03 1.46 -0.91 0.83 Calculation of Value at Risk
28-Jul-05 15.83 20.65 0.39
12-Jul-02 0.73 -0.88 0.29 BERGER PAINTS INDIA LTD
27-Aug-04 6.32 -0.68 0.21
12-Dec-07 19.53 -0.07 0.20 Historical
1-Sep-09 21.05 5.05 0.20
6-Jan-04 3.48 -0.74 0.19 Mean 0.17%
20-Apr-09 13.42 5.73 0.19 Std Deviation 2.82%
8-Sep-03 1.99 -0.88 0.15 Min -29.34%
3-Jul-07 17.25 -0.54 0.15 Max 83.33%
15-Sep-10 37.30 2.32 0.15 CMP 675.0
14-Jun-05 11.23 1.59 0.15
13-Jul-04 4.34 -0.40 0.14 Percentile Confidence VAR% Stock Price VAR(INR)
30-Aug-04 7.23 -0.18 0.14 5.00% 95.00% -3.25% 697.0 -22.0
22-Apr-05 8.84 0.14 0.14 1.00% 99.00% -6.04% 715.8 -40.8
31-Jan-05 7.73 0.88 0.14 0.50% 99.50% -7.81% 727.7 -52.7
8-Mar-04 4.11 -0.79 0.13 10% 90.00% -2.29% 690.4 -15.4
26-Dec-07 19.89 0.18 0.13
27-Mar-06 16.85 -0.89 0.13
1-Dec-14 149.94 10.20 0.12
21-Apr-08 13.38 -0.91 0.12
2-Jan-15 153.92 -0.66 0.12
20-Mar-20 446.90 13.21 0.12
30-Nov-10 31.44 46.31 0.11
6-May-03 0.66 0.00 0.11
10-Apr-03 0.66 0.00 0.11
21-Feb-03 0.66 0.00 0.11
12-Feb-03 0.66 0.00 0.11

Page 5
Amount in crores
Comparable Company Valuation

Market Data Market Data Valuation

Shares
Share Outstandi Equity Enterprise
Company Ticker Price ng Value Net Debt Value Revenue EBITDA Net Income EV/Revenue EV/EBITDA P/E

Berger Paints 670.5 97.1 66071.8 1189.0 66071.8 10567.8 1525.6 860.4 6.25x 43.31x 75.69x
Asian Paints 3347.7 95.9 322200.2 1932.6 322200.2 34488.6 6728.5 4195.3 9.34x 47.89x 76.54x
Kansai Nerolac 319.1 80.8 25829.2 160.0 25829.2 7542.7 836.3 468.5 3.42x 30.88x 55.06x
Akzo Nobel 2427.8 4.6 10553.0 69.7 10553.0 3802.1 552.5 335.1 2.78x 19.10x 32.96x
Indigo Paints 1436.3 4.8 6799.6 11.9 6799.6 1073.3 191.6 131.9 6.34x 35.49x 51.82x
Shalimar Paints 150.7 7.2 1204.7 140.1 1204.7 485.6 -7.5 -36.2 2.48x -159.78x -30.10x
Kamdhenu Venture 297.9 2.7 853.9 56.8 853.9 259.5 -0.1 -11.3 3.29x -9487.63x -71.09x
MCON Rasayan 104.3 0.6 74.1 8.5 74.1 31.1 2.7 1.1 2.39x 27.53x 57.61x
Retina Paints 40.3 1.4 59.7 4.0 59.7 10.9 1.1 0.3 5.46x 53.77x 186.49x
Yug Decor 74.8 0.6 49.8 2.7 49.8 31.2 2.3 1.1 1.60x 21.73x 41.31x

High 9.34x 53.77x 186.49x

75th Percentile 6.05x 41.35x 71.17x
Average 4.33x -936.77x 47.63x
Median 3.36x 29.21x 53.44x
25th Percentile 2.55x 19.76x 35.05x
Low 1.60x -9487.63x -71.09x

Cipla Comparable Valuation EV/Revenue EV/EBITDA P/E

Implied Enterprise Value 35480.9 44558.7 47168.8

Net Debt 1189.0 1189.0 1189.0
Implied Market Value 34292.0 43369.7 45979.8
Shares Outstanding 97.1 97.1 97.1

Implied Market Value 353.0 446.5 473.3

Source: The Valuation School, Screener.in

OverValued OverValued OverValued

Page 6
Calculatiton of ROIC Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Current Assets
Inventories 1,233.5 1,278.5 1,616.1 2,315.8 2,319.1
Trade receivables 671.5 714.1 1,019.7 1,053.7 1,243.1
Short term loans - - - - 4.0
Other asset items 265.7 277.8 335.5 502.4 535.0
Total Current Assets 2,170.7 2,270.3 2,971.4 3,871.9 4,101.3

Current Liablities
Trade Payables 999.0 1,066.0 1,497.0 1,803.0 1,766.0
Advance from Customers 19.0 17.0 25.0 24.0 -
Other liability items 338.0 383.0 378.0 437.0 510.0
Total Current Liablities 1,356.0 1,466.0 1,900.0 2,264.0 2,276.0

Net Working Capital 814.7 804.3 1,071.4 1,607.9 1,825.3

Non Current Assets

Land 61.0 159.0 170.0 169.0 3,331.9
Building 656.0 832.0 884.0 1,009.0 -
Plant Machinery 835.0 1,011.0 1,206.0 1,306.0 -
Equipments 15.0 19.0 23.0 27.0 -
Computers 49.0 56.0 58.0 54.0 -
Furniture n fittings 40.0 44.0 47.0 49.0 -
Vehicles 24.0 27.0 23.0 20.0 -
Intangible Assets 269.0 279.0 288.0 276.0 298.0
Other fixed assets 23.0 25.0 34.0 43.0 -
Gross Block 1,972.0 2,452.0 2,733.0 2,953.0 3,629.9
Accumulated Depriciation (388.0) (536.0) (690.0) (768.0) -
Net Non Current Assets 1,584.0 1,916.0 2,043.0 2,185.0 3,629.9

Invested Capital 2,398.7 2,720.3 3,114.4 3,792.9 5,455.2

EBIT 752.4 861.7 971.2 1,104.6 1,210.0

ROIC 31.37% 31.68% 31.19% 29.12% 22.18%

Page 7
Calculatiton of Reinvestment Rate Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Net Capex 291.0 431.0 185.0 760.0 744.0

Change in Working Capital (10.4) 267.1 536.5 217.4

EBIT 752.4 861.7 971.2 1,104.6 1,210.0

Marginal Tax Rate 25.00% 25.00% 25.00% 25.00% 25.00%
EBIT(1-t) 564.3 646.3 728.4 828.4 907.5

Reinvestment 420.61 452.05 1296.5 961.37

Reinvestment Rate 65.08% 62.06% 156.50% 105.94%

4 Year Average 97.40%

4 Year Median 85.51%

Calculatiton of Growth Rate Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Reinvestment Rate 65.08% 62.06% 156.50% 105.94%

ROIC 31.68% 31.19% 29.12% 22.18%
Intrinsic Growth 20.62% 19.35% 45.58% 23.50%

4 Year Average 27.26%

4 Year Median 22.06%

Page 8