Monsoon Recovery And Urban Growth Will Expand Market Reach

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AnalystConsensusTarget
Consensus Narrative from 22 Analysts
Published
02 Dec 24
Updated
07 Aug 25
AnalystConsensusTarget's Fair Value
₹553.29
1.5% undervalued intrinsic discount
07 Aug
₹545.20
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1Y
5.2%
7D
-3.4%

Author's Valuation

₹553.3

1.5% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update01 May 25
Fair value Increased 0.21%

Key Takeaways

  • Pent-up post-monsoon demand, urbanization, and infrastructure initiatives are expected to drive revenue growth and expand the market for premium products.
  • Gains in market share, focus on high-margin differentiated offerings, and improved operational efficiencies are supporting margin expansion and sustained earnings growth.
  • Mounting competition, price wars, and rising costs threaten Berger's profitability and margin growth amid uncertain demand and increased market commoditization.

Catalysts

About Berger Paints India
    Manufactures and sells paints for home, professional, and industrial users in India and internationally.
What are the underlying business or industry changes driving this perspective?
  • With early and exceptionally heavy monsoons delaying paint demand in Q1, there is strong potential for a recovery in volume as pent-up demand is expected to return post-monsoon, which should support higher revenue growth in upcoming quarters.
  • Ongoing urbanization, higher disposable incomes, and expected government infrastructure initiatives are likely to expand the addressable market for decorative and premium paints, providing a long-term tailwind to top-line growth.
  • Berger Paints is consistently gaining market share among listed peers, even in the face of heightened competition and price wars, suggesting resilience and greater scale that can drive sustained revenue and earnings improvement as sector consolidation continues.
  • Continued investment in differentiated, high-margin products (such as waterproofing, roof cooling, and luxury finishes) as well as digital engagement initiatives and retail network expansion are positioned to support margin expansion and long-term earnings growth.
  • Margin performance has remained robust due to operational leverage and supply chain optimizations (e.g., improved utilization at new plants and control over fixed costs), which should provide further support for stable or expanding net margins as volumes recover.

Berger Paints India Earnings and Revenue Growth

Berger Paints India Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Berger Paints India's revenue will grow by 9.6% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 9.8% today to 10.7% in 3 years time.
  • Analysts expect earnings to reach ₹16.4 billion (and earnings per share of ₹13.79) by about August 2028, up from ₹11.4 billion today. The analysts are largely in agreement about this estimate.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 57.3x on those 2028 earnings, down from 57.7x today. This future PE is greater than the current PE for the IN Chemicals industry at 28.6x.
  • Analysts expect the number of shares outstanding to decline by 0.13% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 13.46%, as per the Simply Wall St company report.

Berger Paints India Future Earnings Per Share Growth

Berger Paints India Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Intensifying competition from existing large players and new entrants (including recent mergers like Akzo and JSW), along with aggressive pricing actions, discounts, and trade schemes, could result in sustained pressure on Berger's revenue growth and net margins.
  • Ongoing price wars, especially concentrated in the mass/economy and primer segments, are eroding value growth and causing a persistent gap between volume and value growth; if not offset, this can negatively impact profitability and earnings.
  • Macro headwinds such as unpredictable and severe monsoons, channeling demand and creating volatility in construction and repainting cycles, introduce short-term sales deferment and longer-term uncertainty in revenue timing and forecasting.
  • The risk of further commoditization in the decorative paints segment, particularly due to new entrants stabilizing with a 5–6% market share (mainly in lower-end products), lowers barriers for unorganized or price-driven players and could erode Berger's pricing power and long-term gross margins.
  • Increased operating and fixed costs-including rising employee costs and higher advertising and promotional spend required to maintain market share-combined with muted industry value growth, may weigh on long-term operating leverage and constrain improvement in net margins and overall earnings growth.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of ₹553.286 for Berger Paints India based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of ₹670.0, and the most bearish reporting a price target of just ₹415.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be ₹153.6 billion, earnings will come to ₹16.4 billion, and it would be trading on a PE ratio of 57.3x, assuming you use a discount rate of 13.5%.
  • Given the current share price of ₹564.8, the analyst price target of ₹553.29 is 2.1% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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