Finlatics Research

Report on Berger Paints

By:- Shivang Bhatia
About the Company - General Overview
Berger Paints was founded by Lewis Berger in 1760 in UK. It
began it's operation in India in 1923 and today Berger Paints
India is the second largest paint company in the country with a
consistent track record of being one of the fastest growing paint
companies, quarter on quarter, for the past few years. Starting
out as Hadfield''s (India), it had just one factory in Howrah, West
Bengal. By the close of 1947, Hadfield''s was acquired by British
Paints (Holdings), UK and came to be known as British Paints
(India). In 1983, the name of the company was changed to
Berger Paints India. Currently, the majority stake is with the
Delhi based Dhingra brothers.
About the Company - General Overview
Berger Paints has established itself through a long course of
time. The company is acclaimed as a game changer in the sector
with a vibrant portfolio of paints and tailor-made customer
services in every paint segment. It has consistently
outperformed its competitors in the past few years and is on its
way to be on the top spot. Berger Paints India is headquartered
at Kolkata, with strategically located manufacturing units across
India (including the subsidiaries).
 Board Of Directors

Mr. K.S.Dhingra Mrs Sonu Halan Mr. kanwardip Dr. Anoop

Bhasin Dhingra Kumar Mittal

Mr. G.S.Dhingra Mr. P.C. Prasad Mrs. Rishma Kaur

Mr. Abhijit Roy Mr. Naresh Gujral Mr. Anoop Hoon

 Shareholding Pattern

⚫Promoters have a stake of 74.98%(no pledging).

⚫FIIs have a stake of 11.24%.

⚫DIIs have a stake of 4.02%.

⚫Retail investors have a stake of 9.75%.

 Name Category Shares Shares %
UK Paints India Ltd Promoter 486545399 50.1
Jensen & Nicholson Ltd Promoter 140656782 14.5
Citiland Commercial Credits Ltd. Promoter 30915659 3.2
Wang Investment Finance Pvt. Ltd. Promoter 29985580 3.1
KSD family Trust Promoter 8312140 0.9
Bigg Investment Finance Pvt. Ltd. Promoter 7952420 0.8
GBS Dhingra family Trust Promoter 5911683 0.6
KS Dhingra Promoter 5488071 0.6
Nalanda India Fund Ltd. FII 39074295 4
Bodies Corporate Public 15516966 1.6
IEPF Public 6274035 0.7
LIC DII 24047252 2.5
Board Committee Members
Audit Committee Business Process & Risk management
⚫ Mrs Sonu Halan Bhasin Committe
⚫ Mr Abhijit Roy
⚫ Mr. G.S. Dhibgra
⚫ Mr. G.S. Dhingra
⚫ Mr. Pulak Chandan Prasad
⚫ Mr. Anoop Hoon
⚫ Mr. Naresh Gujral ⚫ Mr. Srijit Dasgupta
⚫ Mr. Anoop Mittal ⚫ Mr. Kanwardip Dhingra
⚫ Mr. Anil Bhalla

Compensation & Nomination

CSR Committee
&Rumenaration Committee ⚫ Mr. K.S. Dhingra
⚫ Mr. Anoop Hoon ⚫ Mr. Kanwarjit Dhingra
⚫ Mr. K.S. Dhingra ⚫ Mr. Rishma Kaur

⚫ Mr. Pulak Chandan Prasad ⚫ Mr. Anoop Mittal

⚫ Mr. Arunito Ganguly
⚫ Mr. Anoop Mittal
⚫ Mr. Anil Bhalla
⚫ Mr. Srijit Dasgupta
⚫ Mr. Abhijit Roy
 Shareholder's Committee
Share Transfer Committee Stakeholder's Relationship &
⚫ Mr. Abhijit Roy Investor Grievance Committee
⚫ Mr. Anoop Hoon ⚫ Mr. G.S. Dhingra
⚫ Mr. Srijit Dasgupta ⚫ Mr. Abhijit Roy
⚫ Mr. Arunito Ganguly ⚫ Mr. Anoop Hoon
 SWOT ANALYSIS
Strength
⚫ Mutual funds increased the holdings in
past
⚫ months.
⚫ Consistent highest return stock over
five years-Nifty 500.
⚫ Good QoQ results recently.
⚫ Company is with low debt.
⚫ Strong cash generating ability from core
business-improving cash flow from
operation since last 2 years.
⚫ Annual net profits improving since last
2 years.
⚫ Book value per share improving since
last 2 years.
⚫ No pledging of shares by promoters.
⚫ FIIs increasing their holdings.
⚫ Near it's 52 week high.
⚫ Strong product portfolio increases
customer base and market share.
Weaknesses
⚫ MFs decreased their holding in last
quarter.
⚫ Decline in Net Profit with falling profit
margin.
⚫ They are heavily dependent on one
segment that is the decorative segment
for their revenue.
⚫ Their distrinution network has alsways
been weaker compared to Asian Paints
and Nerolac Paints.
⚫ They have a limited pricing power due
to duopoly in the market.
 Oppurtunities Threats
⚫ Rising delivery percentage compared to ⚫ Stock is trading at high
⚫ earlier ⚫ valuations.
⚫ Brokers have upgraded the target in last ⚫ PE of the stock is greater than 40.
3 ⚫ Volatility in crude oil prices affects
⚫ months. it's profit.
⚫ Huge scope of business diversification ⚫ High competition from Asian paints,
is Nerolac paints, Indigo paints.
⚫ available for Berger Paints.
⚫ Market potential is untapped. Still
usage
⚫ of paints in Indian households is very
low.
 Competitive Analysis
Asian Paints
Asian Paints has a market cap of Rs. 187820 crore. It has captured almost
half of the paint industry in India and is a huge name in decorative paints
and industrial paints. Recently it has entered into new business of modular
kitchen design & decor services. The distribution network of this company is
the best. The current PE ratio is less than that of Berger Paints. Both ROCE
and ROE is better and debt/equity ratio is very low. Company has pledged
it's shares but recently the pledging has also been reduced. If we see sales
growth and net profit growth in the last 5 years they have been
outperforming. Asian Paints is the market leader and a household name in
India.
 Competitive Analysis
Kansai Nerolac
kanzai Nerolac has a market cap of Rs. 26318 crore. It is not a huge name in
decorative paints but a market leader in industrial paint segment. The
distribution network of this company is the good. The current PE ratio is less
than that of Berger Paints which means it is undervalued. Both ROCE and
ROE is not good wrt Berger paints but debt/equity ratio is very low.
Company has not pledged any of it's shares and promoter holding is at 75%.
The sales growth and net profit growth in the last 5 years are decent. The
ROA is 10.83% only which is a bad sign for future performance.
 Conclusion
⚫ Future is bright for Berger Paints.

⚫ Paint sector has a lot of potential in India as it is not

fully penetrated. Not much competition is available
for Berger Paints. They should focus more on
improving their distribution channels and invest
more in R&D. Addition of new product lines(such as
water proofing), shift in demand from unorganised
to organised space would contribute to it's growth.