Shares of Berger Paints India hit a fresh 52-week high of Rs 654.35, as they rallied 4 per cent on the BSE in Friday’s intra-day trade in an otherwise weak market. In comparison, the S&P BSE Sensex was down 0.19 per cent at 66,104 at 10:13 AM.
In past one month, the stock has outperformed the market by surging 10 per cent, as compared to 1.4 per cent rise in the S&P BSE Sensex.
For the June quarter (Q1FY24), Berger Paints had reported strong earnings, with a jump of 39.9 per cent year-on-year (YoY) in profit after tax at Rs 354.91 crore. Revenue grew 9.8 per cent YoY at Rs 3,029.51 crore on back of high double digit volume growth led by healthy growth across urban and rural markets.
Decorative registered volume growth in the mid teens and double digit value growth. Auto GI and Protective Division did well even on high bases. Powder coatings underperformed in Q1 but the management expected it to do better in Q2.
The management expects to improve the company’s performance across all business segments in view of the strong demand outlook following moderating inflation, the prediction of a normal monsoon and high credit growth in the economy.
Economic growth, urbanization and purchasing power are three key demand drivers of decorative paint growth in any country. India is ticking all the boxes right in this aspect. With a fair GDP growth, rising urbanization and increasing purchasing power of a vast section of population, the outlook remains promising.
Sales outlook for paints and coatings industry (FY 2023-24) looks bright with an expected GDP growth of 7 per cent coupled with urbanization, spending on infrastructure and availability of disposable income among the masses, Berger Paints said in FY23 annual report.
With drive on capital outlay leading to robust growth in infrastructure spending by the Central Government, a large push has been made towards capital expenditure for infra projects. Accounting for more than 30 per cent of India’s paint and coatings industry, industrial segment of the paints and coatings has rapidly grown over the years. Primarily driven by steady growth in automotive segment, industrial coatings segment is expected to increase its share in the coming years.
Growth in automotive segment has been driven by growing automotive industry in the country. India has overtaken Japan to become the third largest vehicle market in 2022 after China and the United States, selling more than 4.25 million vehicles riding on pent-up demand and enhanced production by car makers, the company said.