Berger Paints made headlines in the stock market on September 22 as its shares saw a remarkable 6 percent surge, reaching a 52-week high at Rs 665 per share during intra-day trading. This surge came on the heels of the company’s ex-bonus status announcement. Meanwhile, the S&P BSE Sensex remained relatively flat at 66,250 levels around 11:50 am.
Over the past month, Berger Paints, a prominent player in the paint and coating manufacturing industry, has demonstrated impressive performance, with a 12 percent increase in its stock value. This remarkable growth outpaced the benchmark Sensex, which saw only a 1 percent gain over the same period.
Earlier this month, Berger Paints had officially designated September 23 as the record date to determine shareholders’ eligibility for the issuance of bonus equity shares. Shareholders will receive one equity share of Re 1 for every five equity shares of Re 1 each.
In the first quarter of the fiscal year 2023-24 (Q1FY24), the company reported a net profit of Rs 326.3 crore, marking a substantial 39 percent YoY increase from Rs 234.4 crore in the corresponding period of the previous year. This impressive profit growth was complemented by a 10 percent YoY surge in the company’s revenue from operations, reaching Rs 2,739.7 crore in Q1FY24, up from Rs 2,488.6 crore in Q1FY23.
Total expenses also experienced a 6 percent YoY increase, totaling Rs 2,312.4 crore. Despite this, Berger Paints managed to significantly reduce its net debt, which dropped from Rs 610 crore in Q4FY23 to Rs 243 crore in Q1FY24.
Looking ahead, Berger Paints is optimistic about achieving a net cash positive status by the end of the current fiscal year. The management is bullish about the company’s prospects, expecting double-digit revenue growth driven by factors such as favorable monsoon conditions, increased infrastructure investments, and the upcoming festive season.
Market analysts at HDFC Securities have maintained their ‘add’ rating for Berger Paints, setting a target price of Rs 700 per share. They noted, “Berger Paints remains resilient in maintaining its market share despite growing competitive pressures. The industry appears to have overcome the worst of the gross margin challenges. Management’s confidence in sustaining a 38-40 percent gross margin or 16-18 percent EBITDA margin for FY24 is encouraging. As a result, we are maintaining our earnings-per-share (EPS) projections for FY25/26.”
In summary, Berger Paints’ recent surge to a 52-week high following the ex-bonus announcement reflects its strong financial performance and positive outlook, making it a stock to watch in the market.