This article provides an in-depth comparison (Asian paints vs Berger paints) between the two biggest paint companies in India. In this article, we have compared the business, financials, fundamentals, and stock performance of both Asian paints and Berger paints.
This will help you evaluate which one is better for investment. But before I proceed, please note that our analysis is only for educational purposes and not to provide stock tips. This article is to empower you with the right knowledge so that you can make an informed investment decision.
Asian Paints vs Berger Paints: A Snapshot
Asian paints have come a long way since their humble beginnings in 1942. Four friends, who are willing to take on the world’s biggest, most famous paint companies operating in India at that time, set up a partnership firm. over the course of two decades, Asian paints became a corporate force and India’s leading paints company. Driven by a strong consumer focus and innovative spirit, Asian paints have been a preferred brand for paints in India for more than 50 years.
Asian paints is the no.1 paints company in India, the third-largest paints company in Asia, and the ninth-largest paints company in the World.
Berger paints was established in 1923, today it is the second-largest paint company in India, the 7th largest paint company Worldwide in terms of market cap, and ranked amongst the top 14 paint companies in the world in 2020 by coatings world.
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Asian Paints Business Overview
Asian Paints operates in 14 countries and have 26 paint manufacturing facilities in the world, 70,000 plus dealer network in India, 18 AP beautiful stores in India, 450 plus color ideas stores in India, 10,000 plus global workforce, 200 plus scientists driving innovation, and servicing consumers in over 60 countries.
The company offers a wide range of paints for decorative and industrial use and also offers wall coverings, adhesives, and services under the portfolio. The company also has a presence in the home improvement and decor segment and offers bath and modular kitchen products.
Asian paints products & Services
Products
- Paints.
- Chemicals.
- Wall Coverings.
- Textures Painting Aid.
- Waterproofing solutions.
- Wall Stickers.
- Mechanized tools.
- Kitchens & Wardrobes.
- Adhesives.
- Modular Kitchens & Wardrobes.
- Bath fittings & Sanitaryware.
- Sanitizers & Surface disinfectant.
- Furniture, Furnishings & Lightings.
Services
- Home painting services.
- Interior design services.
- Experience retail stores.
- Color consultancy.
- Projects.
- Sanitization services.
Asian paints global footprint
Asian paints have a presence in over 14 countries of the world with a considerable presence in South Asia and the Middle East.
The 14 Counties are Egypt, Ethiopia, Bahrain, UAE, Oman, Bangladesh, India, Nepal, Indonesia, Solomon Islands, Vanuatu, Fiji, Sri Lanka, and Samba.
If we see the region-wise revenue, 26% of the revenues are from the Middle East( Oman, Bahrain, and UAE ), 24% of the revenues are from Africa( Egypt and Ethiopia ), 5% of the revenues are from South Pacific( Fiji, Solomon Islands, Samoa, and Vanuatu) and 45% of the revenues are from Asia ( Bangladesh, Nepal, Sri Lanks, and Indonesia).
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Products of Asian Paints
Exterior paints
Interior paints
Wood finishes
Metal finishes
Asian Paints has its products in other categories like Adhesives, Waterproofing, Tools, Bath fittings and sanitaryware, Wallcoverings, Kitchens & wardrobes, sanitizers, and surface disinfectants, and Furniture, Furnishing & lighting.
48 new products and variants developed in the financial year 2021.
Asian paints Business: Key points
Decorative coatings
Asian paints products cater to varied price points and requirements, consisting primarily of four segments Interior walls, Exterior walls, wood finishes, and metal finishes, Also introduced new categories such as waterproofing, wallpapers, painting tools, and implements, adhesives, and sanitizers. Aligned to ever-changing customer requirements, Asian paints is consistently strengthening the brand value proposition by emerging as a comprehensive decor solutions provider.
Asian paints 83.9% or 18,221 Crore rupees of revenue is from the Decorative coatings segment.
Industrial coatings
Asian paints cater to the Indian industrial coatings market through two 50:50 joint ventures with PPG Inc, USA, a global leader in coatings. The first joint venture ‘PPG Asian paints Pvt Ltd’. Services the increasing requirements of the Indian automotive coatings market.
The second joint venture ‘Asian Paints PPG Pvt. Ltd’. Services the protective industrial powder, industrial containers, and light industrial coatings markets in India.
Asian paints offer the entire spectrum of industrial coatings products such as automotive coatings, refinishes, protective coatings, floor coatings, and powder coatings, among others. Asian paints is the market leader in the auto refinish segment and the second-largest player in the automobile OEM segment.
2.3% or 504.3 crore rupees of revenue is from the Industrial coatings segment.
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International Operations
Asian paints operate in three regions of the world – South Asia and Indonesia, the Middle East, Soth Pacific, and Africa through the seven corporate brands ( Asian paints, Apco coatings, Asian paints Berger, Asian paints Causeway, SCIB paints, Taubmans, and Kadisco Asian paints ). Asian paints presence in the Middle East and South Asia is significant and expanding with a key focus on Africa and Indonesia.
11.5% or 2,490 crore rupees of revenue is from International operations.
Bath Fittings and sanitaryware
2.3% or 507 crore rupees of revenue is from the Bath fittings & sanitaryware segment.
Berger paints business
Berger paints is the second largest paint company in India, and the seventh-largest paint company worldwide in terms of market cap, Berger paints has a presence in 8 countries with exports to several countries.
CAGR of consolidated revenues in 10 years is 11.3%, CAGR of market capitalization in 10 years is 36%, CAGR of consolidated PAT in 10 years is 17%, and CAGR of consolidated PBIT is 15.6%.
80% of the revenues are from the decorative paints segment, and the rest are from industrial paints, of which 18% of revenues are from Automotive, 2% from Powder coating.
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Products of Berger paints
Interior paints
Berger paints have 17 products in the Interior paints category, 9 products in Exterior wall coatings, 6 products in Metal finishes, 12 products in Wood finishes, 1 product in Glass finishes, 15 products in Undercoats, 23 products in Waterproofing solutions, 11 products in Exterior textures, and 5 products in home hygiene and safety.
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Product innovations of Berger paints
Wall Shield 2K: A white cement-based waterproofing undercoat with high waterproofing ability and crystalline effect for interior and exterior walls.
Dampstop: A single pact high-performance polymer-modified cement-based product which forms a strong flexible waterproof coating over the substrate suitable for use in concrete structures, bathroom, kitchen, exterior walls of the water tank, exterior walls, and interior walls.
Waterproof Putty: A white cement-based premium quality Putty with some special unique properties. can be used externally or internally on concrete/mortar substrates to provide a smooth aesthetic finish & extended life of topcoat paints.
Some other innovations are Seal-O-Prime, Dampshield Elasto, Roofguard, and PU Roofkoat.
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Asian Paints vs Berger Paints: Technical Analysis
Asian Paints vs Berger Paints: Key financials
| Asian Paints | Berger Paints | |
|---|---|---|
| Market Cap | 3,11,518 Cr | 70,864 Cr |
| Price To Earnings (P/E) | 101 | 96 |
| Sales Growth ( 5 Years ) | 9.37% | 9.31% |
| Profit Growth ( 5 Years ) | 13.4% | 13.8% |
| ROE ( 5 Years ) | 27.2% | 23.4% |
| ROCE ( 5 Years ) | 39% | 32.4% |
| Debt To Equity | 0 | 0.05 |
Asian paints is 4 times bigger than Berger paints in terms of market cap. In other financial parameters, both Asian paints and Berger paints are equally performing, but the PE of Asian paints is 93, whereas PE multiple of Berger paints is 103. We can clearly say that Berger paints is slightly overvalued than Asian paints.
Financially both Asian paints and Berger paints are very strong.
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Asian Paints vs Berger Paints: Profit & Loss
| Asian Paints | Berger Paints | |
|---|---|---|
| Net Sales | 18,516 Cr | 6,021 Cr |
| Profit Before Tax | 4,090 Cr | 918 Cr |
| Net Profit | 3,052 Cr | 680 Cr |
| EPS | 31.82 | 7.01 |
In terms of Net sales, profit before tax, net profit, EPS, Asian paints outperformed Berger paints with a huge margin. Clearly, Asian paints is the winner.
Asian paints revenue from operations increased 7.7% from last year to 18,516 crore rupees, profit before tax increased 19.8% from last year to 4,090 crore rupees, Profit after tax increased 15% from last year to 3,052 crore rupees, and EPS increased 15% from last year to 31.8.
Berger paints Revenue from operations for the year ended 31st March 2021 was 6,021 crore rupees as against 5,691 crore rupees in the corresponding last financial year, representing an increase of 5.8% over the last financial year.
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Asian Paints vs Berger Paints: Balance Sheet
| Asian Paints | Berger Paints | |
|---|---|---|
| Equity & Liabilities | ||
| Share Capital | 95.92 | 97.13 |
| Total Reserves | 11,995 | 3,182.48 |
| Borrowings | 14.31 | 0 |
| Other N/C Liabilities | 901.93 | 268.24 |
| Current Liabilities | 4,575.33 | 1,820.23 |
| Total Liabilities | 17,582.67 | 5,368.08 |
| Assets | ||
| Net Block | 4,602.61 | 1,501.59 |
| Capital WIP | 110.11 | 97.60 |
| Intangible WIP | 0 | 0 |
| Investments | 2,161.94 | 585.87 |
| Loans & Advances | 229.84 | 70.07 |
| Other N/C Assets | 521.63 | 27.69 |
| Current Assets | 9,956.54 | 3,085.26 |
| Total Assets | 17,582.67 | 5,368.08 |
Both Asian paints and Berger paints balance sheets are very strong.
How to read or analyze a Balance Sheet.
Asian Paints vs Berger Paints: Ratings
| Asian Paints | Berger Paints | |
|---|---|---|
| Crisil | ||
| Long Term Rating | AAA | AAA |
| Short Term Rating | A1+ | A1+ |
| CARE | —– | A1+ |
Asian Paints vs Berger Paints: Shareholding Pattern
| Asian Paints | Berger Paints | |
|---|---|---|
| Promoters | 52.63% | 74.98% |
| FII | 19.45% | 11.28% |
| DII | 7.61% | 3.41% |
| Public | 20.31% | 10.32% |
| Others | 0% | 0% |
Asian paints vs Berger paints: Stock performance
As you can see from the graph above, both Asian paints and Berger paints performed well in the last five years.
Asian paints were grown 3,600% from its IPO, whereas Berger paints were grown 4,400% from its IPO.
For the past five years, Asian paint’s stock price was grown at a CAGR of 22.7%, whereas Berger paints stock price was grown at a CAGR of 25.4% over the last five years.
Asian Paints vs Berger Paints: Strengths
Below are the strengths of Asian Paints and Berger Paints
Asian Paints
- The company is virtually debt-free.
- The company has a healthy interest coverage ratio of 58.08.
- The company has an efficient Cash Conversion Cycle of -22.34 days.
- The company has a healthy liquidity position with a current ratio of 2.18.
- The company has good cash flow management; CFO/PAT stands at 1.06.
Berger Paints
- The company has shown a good profit growth of 16.38% over the past 3 years.
- The company has significantly decreased its debt by 67.02 Cr.
- The company has been maintaining healthy ROE of 23.53% over the past 3 years.
- The company has been maintaining a healthy ROCE of 31.56% over the past 3 years.
- The company is virtually debt-free.
Asian Paints vs Berger Paints: Weaknesses
Below are the weaknesses of Asian paints and Berger paints.
Asian Paints
- The company has shown a poor revenue growth of 9.37% over the past 3 years.
- The company is trading at a high PE of 101.99.
- The company is trading at a high EV/EBITDA of 61.49.
Berger Paints
- The company has shown a poor revenue growth of 8.43% over the past 3 years.
- The company is trading at a high PE of 96.83.
- The company is trading at a high EV/EBITDA of 57.03.
Asian paints vs Berger paints: Which One is Better?
We have compared both Asian paints and Berger paints in terms of business, Product categories, revenues, financials, profit & loss, balance sheet, and stock performance.
In all of those comparisons, Asian paints outperformed Berger paints with small margins, except in stock price. But in terms of revenues, profits, and market cap, Asian paints is four times bigger than Berger paints.
Financially and fundamentally both Asian paints and Berger paints are very strong. Both companies’ management is also very strong and experienced, both companies’ foundation is very strong, and both companies have very good brand value.
There is a lot of growth possible in the paints sector, especially for branded paints. If we see a few years back the mindset of people is different, people usually don’t give much importance to decorating their homes. Now people are very much interested in decorating their houses in the best way possible. and spending more money on interior and exterior paints to get a good-looking feel. The customers are moving towards the branded paints side
If you want to invest in the paints sector and are confused about whether to choose Asian paints or Berger paints. than Asian paints is slightly better than Berger paints. Both companies are very strong, but if you can afford to invest in only one company then it is Asian paints.
Asian Paints vs Berger Paints: Real-Time Chart
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