Berger Paints (BERGEPAINT)

FairStock Score: 49/100 — MIXED

Score breakdown: P/E: 0/3 · ROCE: 1/2 · Growth: 1/2 · Dividend: 0/1

Key Financials

Strengths

• Strong brand and distribution moat in Indian paints, with 74.98% promoter holding aligning interests.
• Low leverage: Debt/Equity of 0.11 and Altman Z-Score of 6.09 indicate a very safe balance sheet.
• High capital efficiency: ROCE of 24.90% and ROE of 17.13% demonstrate quality returns.
• Positive free cash flow of ₹619 Cr and Piotroski F-Score of 8/9 suggest healthy underlying earnings quality.
• Strong 5-year revenue CAGR of 11.11% shows the business has historically compounded well.

Concerns

• Very expensive valuation: P/E of 47.46, EV/EBITDA of 32.49, and P/B of 8.87 leave little room for error.
• Growth has stalled recently: sales rose only 3.13% and net profit fell 7.57% in the latest data.
• Price is far above intrinsic estimates: Graham Number of ₹103.67 and DCF value of ₹70.24 imply no margin of safety.
• Low dividend yield of 0.83% means returns depend almost entirely on future price appreciation.

AI Analysis

Berger Paints has the kind of franchise I admire: trusted brand, strong distribution, and a promoter team holding nearly 75 percent. Its financial position is sound—debt is only 11 percent of equity, ROE is 17.13 percent, ROCE is 24.90 percent, and the Altman Z-score of 6.09 suggests no distress. A Piotroski score of 8 out of 9 and positive free cash flow of ₹619 crore add to the quality. But my mentor Graham taught me that no good business is a good buy at any price. At ₹468.40, Berger trades at 47.46 times earnings and 8.87 times book. EV/EBITDA of 32.49 leaves nothing for error. Meanwhile the latest reality is sobering: sales grew only 3.13 percent and net profit fell 7.57 percent. Five-year revenue CAGR of 11.11 percent shows the company can grow, but the current price assumes that pace accelerates, not decelerates. The Graham Number is ₹103.67 and my rough DCF value is ₹70.24—against ₹468, there is no margin of safety; there is a margin of pain. I would rather miss a rally than overpay for one. Even with a quality franchise, paying 47 times a business whose profit is falling is speculation. Berger may deserve a place on a watchlist, but not in a value portfolio today. I need either a meaningfully lower price or clear evidence of renewed double-digit growth before I part with my money.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer