BERGEPAINT - Fundamental Analysis: Financial Health & Valuation

Last Updated Time : 20 Dec 25, 11:14 pm

Fundamental Rating: 3.7

📊 Financials: Berger Paints shows strong fundamentals with ROE at 20.0% and ROCE at 24.9%, reflecting efficient capital utilization. EPS stands at ₹8.69, supported by profitability. Debt-to-equity ratio of 0.08 indicates a virtually debt-free balance sheet, ensuring financial stability. However, quarterly PAT declined from ₹321 Cr. to ₹176 Cr. (-23% QoQ), showing short-term earnings pressure.

💹 Valuation: Current P/E of 60.0 is significantly higher than the industry average of 38.7, suggesting overvaluation. P/B ratio (~10.9) is elevated compared to book value of ₹49. PEG ratio of 4.64 highlights weak earnings growth relative to valuation. Intrinsic value appears lower than current price, limiting margin of safety.

🎨 Business Model: Berger Paints operates in decorative and industrial paints, with strong brand recognition and distribution reach. Competitive advantage lies in its wide retail presence, innovation in product offerings, and strong demand from housing and infrastructure sectors. However, earnings volatility and raw material cost pressures remain challenges.

📈 Entry Zone: Attractive accumulation zone is around ₹500–₹520 (near support and below DMA 50 & 200). Current price ₹535 is below both DMA 50 and DMA 200, indicating bearish momentum. RSI at 37.9 suggests oversold conditions, while MACD (-5.50) signals weakness.

🕰️ Long-Term Guidance: Berger Paints is a fundamentally strong consumer brand with efficient returns and strong market presence. However, valuations are stretched and earnings growth is weak. Best strategy is cautious accumulation near support levels and holding for long-term exposure to housing demand and infrastructure growth.

Positive

• Strong ROE (20.0%) and ROCE (24.9%) indicate efficient capital utilization 💪
• Debt-to-equity ratio of 0.08 ensures financial stability 💰
• Strong brand recognition and wide distribution network 🎨
• DII holdings increased (+0.26%), showing domestic institutional support 📊

Limitation

• High P/E (60.0) compared to industry average ⚠️
• P/B ratio (~10.9) indicates overvaluation 📉
• PEG ratio of 4.64 reflects weak earnings growth ❌

Company Negative News

• Quarterly PAT declined from ₹321 Cr. to ₹176 Cr. (-23% QoQ) 📉
• FII holdings decreased (-0.24%), showing reduced foreign investor confidence ⚠️

Company Positive News

• DII holdings increased (+0.26%), showing domestic institutional support 📊
• RSI at 37.9 indicates oversold conditions, potential for technical rebound 🚀

Industry

• Paints sector benefits from rising housing demand and infrastructure development 🏠
• Industry P/E at 38.7 indicates moderate valuation compared to Berger’s premium 📊

Conclusion

⚖️ Berger Paints is a fundamentally strong company with efficient returns, strong brand equity, and wide distribution. However, stretched valuations and weak earnings growth limit upside. Best strategy is cautious accumulation near ₹500–₹520 and holding for long-term exposure to housing demand and infrastructure growth.