IDBI Capital has maintained Sell rating on Berger Paints (BRGR) with a revised target price of Rs 628.

Commenting on the result review, the broking firm said,  "Berger Paints reported better than expected result driven by continued strong growth momentum in decorative coatings and robust performance of subsidiaries. Positively, revenue growth of BRGR during 4QFY21 stayed ahead of competition.

Management guides that they have significantly improved on distribution expansion during FY21 as compared to normal rate of 10-12%. Also, BRGR fared well on managing input cost inflation (gross margin remained flat) compared to other players in paint industry (who reported gross margin contraction). BRGR has taken c.2.5% price hike in May'21 to address rise in raw material cost and is likely to undertake more price hikes in future.

We maintain our positive stance on BRGR. Driven by better-than-expected performance, we have upgraded our EPS estimates by 2-9% during FY22-23E. We upgrade our valuation multiple to 55x. Our revised TP stands at Rs 628. We maintain SELL rating due to expensive valuation."

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