For Berger Paints investors, there are a few shades of grey
₹560.25 apiece on Wednesday. In the past one year, Berger’s shares have gained around 9% versus the 5% drop in Asian Paints.
According to Kotak Institutional Equities’ FY25 earnings per share estimates, shares of Berger and Asian Paints are currently trading at around 49.1x and 53.6x, respectively. Berger’s pricey valuations suggest a good portion of the optimism is factored into the price currently.
In the near term, if crude oil prices stay high, it could drive up costs and hurt the sector’s profitability outlook. In a competitive landscape where companies are often pushed to give out rebates and discounts, this is bad news.
For FY24, Berger sees gross margin in the range of 38-40%. The Street is expecting Berger to report gross margin at the higher end of the band considering its healthy Q1 gross margin and benign raw material at that point, said Kotak’s analysts in a report on 26 September.
However, elevated crude oil price is a potent risk to the Street’s 17% FY24 Ebitda margin forecasts, it added. ."Exciting news! Mint is now on WhatsApp Channels
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