Berger Paints Company analysis

Industry Overview : 

Colours are inseparable part of human life. From start of the day to end of the life, there is always some colour code for our clothing. Art and other things are also part of Our life. And when it comes to part of our cars, home, industrial use, Paints industry play key role.

Interestingly in India the use of Paints is much less, per capita consumption of Paints in India is around 4kg. That is the reason why it will be easy for paint industry to grow with 13% per annum in near future. As the Industrialisation amd domestic consumption is expected to grow, with smart city and other Industrialisation expected to grow, consumption of Paints is also expected to grow. In both broad Categories of Paints,  Decorative and industrial Paints, the growth is expected in both. But as in India the supply exceeds demand for Both, the important driver is increase in consumption. As 70% of paint market is dominated by decorative paint like interior and exterior wall and housing paint, it gives big leverage for India.

The important factor for paint industry is Raw material, with 300 different Raw material, out of which big part is Crude Oil, lower Crude Oil is Good for industry.

Company overview

Berger Paints India Ltd, Kolkata based company, is the third largest paint manufacturer and the second largest decorative paint player in India.

The company was incorporated on December 17, 1923 as Hadfields (India) Ltd in Kolkata. In December 12, 1947, British Paints Holdings acquired the company and the name was changed into British Paints India Ltd. In the year 1965, British Paints (Holdings) Limited, UK was acquired by Celanese Corporation, USA. As a result, the controlling interest of the Company passed on to CELEURO NV, Holland. In the year 1969, Celanese Corporation sold their interest in the Indian company to Berger, Jenson Nicholson Limited, UK. In December 1983, the company name was changed to Berger Paints India Ltd. From 1983 till date, the company has solely used and developed the name and trademark of Berger and all their other variants in India.

The company holds distribution network comprising of 75 stock points and above 12,000 paint retailers. They are having their manufacturing facilities in West Bengal, Uttar Pradesh, Pondicherry, Goa, and Jammu & Kashmir. The company is well known for their industrial paint segment and hold Technical License Agreements with DuPont Performance Coatings in the area of automotive coatings, Nippon Paint Co Ltd for new generation of automotive coatings, Orica Australia Pty Ltd In the area of protective coatings, TIGERWERK Lack-u.Farbenfabrik GmbH & C. KG, Austria for specialized powder coatings and Nippon Bee Chemical Co Ltd for coating on plastic auto parts and mobile phones.

The company Manufacturing variety of segment which includes interior and exterior wall coatings metal and wood paint. The interior wall coatings include interior emulsions, which consist of Silk, Breathe Easy, Rangoli Easy Clean, Rangoli Super Acrylic Emulsion, Rangoli Super Acrylic Emulsion; designer finishes, which consist of Illusions, Metallica and Marble; distempers, which includes Bison Distemper.

SHAREHOLDING 

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Financials and Ratios.  

 2010-112011-122012-132013-142014-152015-16
Revenue2340.702947.7 33346.413869.724322.064634.12
Net Profit150.10180.04218.40249.39264.70369.77
Net Profit Margin7.036.666.936.926.988.58
EPS4.285.126.066.763.845.12
Book value20.8721.8328.4032.6418.6421.74
RoE20.5323.4721.3 320.7120.5923.50
ROCE20.620.4420.6919.9519.8422.72
ROA12.1611.7411.4010.8411.5114.13
Dividend per Share1.301.401.802.201.251.65
Dividend Payout30.3427.3129.7032.5432.5732.24
Debt to Equity0.150.220.310.270.220.04
Asset Turnover172.88176.26164.4 6156.63164.76164.61

Future Prospects : Even though Asian Paint is leader in the segment, but the Berger is catching up. The company trying Hard for Increasing brand awareness via ads. Industrial paint segment is plus point of the company as Asian Paint is majority active in Decorative Paints. This segment is increasing as India is one of the largest manufacturer of cars and Automobile.

Prmotor holding is high and that is very important for the company. ROCE and Sale growth is important factor for anyone and the company is performing better here also.

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About Ashutosh Tilak

Tracking Indian Capital Market since 2010. Finance Student, On this blog I am writing about finance and Investing. You can contact me analystashu@gmail.com or @androidashu & @InsideFinanc on twitter