• MAY 6, 2001

Berger: Sales slows down

Berger Paints, the third largest paint company in India, has posted a 12% rise in sales to Rs 4,940 m for FY01. The growth in topline has definitely slowed down in the last quarter if one were to consider the company's performance for the first nine months of FY01.

(Rs m) FY00 FY01 Change
Sales 4,415 4,940 11.9%
Other Income 20 21 7.2%
Expenditure 4,007 4,464 11.4%
Operating Profit (EBDIT) 408 476 16.7%
Operating Profit Margin (%) 9.2% 9.6%  
Interest 79 83 4.7%
Depreciation 64 84 31.3%
Profit before Tax 285 330 16.1%
Extraordinary item (14) (1)  
Tax 33 44 33.0%
Profit after Tax/(Loss) 237 285 20.2%
Net profit margin (%) 5.4% 5.8%  
No. of Shares (eoy) (m) 26.6 26.6  
Diluted number of shares 26.6 26.6  
Earnings per share (Rs) 8.9 10.7  

Sales for 1QFY01, 2QFY01 and 3QFY01 grew by 11%, 20% and 11% respectively. For the first nine months of the current year, topline grew by almost 14%. Due to the slow down in the economy and natural calamities in some states, growth seems to have waned in the last quarter. We had projected a 13.5% growth in sales against which the company has reported a 12%. However, growth in 4QFY01 is not available.

Operating profits for FY01 has gone up significantly by 17% to Rs 476 m backed by a 400 basis points rise in operating margins. Despite the rise in rutile titanium dioxide prices and competition, the rise in margins is commendable. This could also be attributed to higher economies of scale with the merger of Rajdoot Paints. However, higher depreciation and tax outflow has resulted in lower profit growth for the company. Net profits for FY01 has risen by 20% to Rs 285 m.

The scrip is currently trading at Rs 89 at a P/E multiple of 8.3x the FY01 earnings. On the sales of Rs 4,940 m, market capitalisation to sales works out to 0.5 times (market capitalisation is Rs 2,364 m).

Copyright © Equitymaster Agora Research Private Limited. All rights reserved.
Any act of copying, reproducing or distributing this newsletter whether wholly or in part, for any purpose without the permission of Equitymaster is strictly prohibited and shall be deemed to be copyright infringement.

LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (Research Analyst) bearing Registration No. INH000000537 (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA, Canada or the European Union countries, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.

SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.

Equitymaster Agora Research Private Limited (Research Analyst)
103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India.
Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: info@equitymaster.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407