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Berger: Our key assumptions
Jul 10, 2006

Since 2000, the paint sector has been clocking growth rate of over 12.5% per annum in volumes in light of robust construction activity. With income rising faster and interest rates declining, the affordability factor improved dramatically, which in turn boosted demand for housing. The paint sector, especially on the decorative side, gained immense traction. But with interest rates on an uptrend, will paint companies be able to sustain the topline growth? What will happen to marginal players like Berger Paints? Here are our key assumptions.

(Rs m) 4QFY05 4QFY06 Change FY05 FY06 Change
Net sales 2,037 2,432 19.4% 8,317 9,879 18.8%
Expenditure 1,807 2,194 21.4% 7,458 8,786 17.8%
Operating profit (EBDITA) 230 238 3.4% 859 1,093 27.2%
EBDITA margin (%) 11.3% 9.8%   10.3% 11.1%  
Other income 25 22 -8.9% 54 53 -1.5%
Interest 7 17 150.0% 36 53 45.1%
Depreciation 32 45 38.3% 157 174 10.8%
Profit before tax 216 199 -7.7% 720 920 27.7%
Extraordinary income/(expense) (42) - - (57) (3) -
Tax 38 62 65.3% 142 214 50.8%
Profit after tax/(loss) 136 137 0.6% 521 703 34.9%
Net profit margin (%) 6.7% 5.6%   6.3% 7.1%  
No. of shares (m) 199.5 199.5   199.5 199.5  
Diluted earnings per share (Rs)         3.5  
Price to earnings ratio (x)         21.9  

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