Should you buy Berger Paints ? Fundamental Analysis

Should you buy Berger Paints ? Fundamental Analysis


An Investor who is ready to buy stocks in the Stock Market should invest based on Fundamental Analysis - Value Investing. And also the investor should be aware about the Risk Management in Equity Investing. If not, it is advisable to consult with a Good Financial Advisor to make such decisions.

Berger Paints is a company (Now Public Listed Company) founded by Louis Steigenberger of Germany. It was later renamed as 'Lewis Berger'. Currently, Berger Paints is an Indian Paint Company is headquartered at Kolkata. The Current Chairman of Berger Paints is Mr. Kuldip Singh Dhingra.

It is in the Paint Sector which the company operates its business in Five Countries including Russia, Nepal and Poland. It has a distribution network of more than 25,000 Dealers and 3500 Plus Employees for Manufacturing and Selling of Paints.

Currently, the Market Capitalization of Berger Paints stands at Rs. 47,000 Crore in the Indian Stock Market. The Book value comes around 26 Rupees and the Stock PE is said to be 76. The Stock is trading at 18 times to its current Book Value.

Over the past one year, the stock has given a return of more than 65 Percent for the Investors. If anyone invested in this stock before 10 years by today - Say Rs. 10,000/- investment in Berger Paints in the year of 2009. Then now it will fetch you Rs. 11.70 Lakh which is 117 Times (Including one Bonus & One Split) - A Multibagger.

The Debt to Equity ratio is at 0.30 and the Promoters holding is around 75 Percent. There is no Pledging on Promoters holding shares. The Compounded Sales growth is seen as 10 Percent for the Last 5 years and 15 Percent for the last 10 Years. Profit Growth compounded by 15 Percent for the last 5 years and 20 Percent for the past 15 10 years, which is a positive factor the Business.

The Return on Equity stood at 23 Percent for the Past 10 Years. Stock Price 10 years CAGR stood at 37 Percent and 30 Percent for the 5 Years. Company's Reserves are also gradually increasing which is shown in the Balance Sheet. In the year of 2008, the Reserves was said to be Rs. 299 Crore to Rs. 2,460 Crore in September 2019.

Cash Flow and Net Profits by every year is also gives Positive sign for this Stock. Lower Tax paid in the September 2019 quarter helped the company to make good profits.

Berger Paints Fair Value 2019

Recent Corporate Tax cuts have helped many listed companies to maintain its profits. At the same time, there is no major change in sales growth for most of the companies.

Currently, Berger Paint is at its high. These type of stocks can be looked if there is a chance of decline in Stock Price. Even after the Bonus issue happened in the year of 2016, the stock has much appreciated with its levels.

The Market Leader of this Paint Sector continues with Asian Paints and the other core competitors for Berger Paints are Kansai Nerolac and Akzo Nobel.

Kindly share your views / comments with a smile :)

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