Initiating Coverage- Buy Berger Paints with a target of Rs 275 By Kotak Securities

Berger Paint is the second largest decorative paint company in India and third largest in domestic industrial segment. It enjoys ~19% share of organized domestic decorative market. Berger also has a presence in overseas markets, prominent ones being Nepal (where it is a significant player in decorative market) and Poland (where it is second largest player in external insulation finishing system).

INVESTMENT ARGUMENT

· Berger has added capacity across segments which has led to increase in volume for Berger esp. in the decorative volume growth which was ahead of market for FY15

· With improving macro environment and benign raw material situation, we expect the EBIDTA margins of the company to improve 240 bps over FY15 to FY17E

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