Berger Paint vs Indigo Paint

Berger Paint vs. Indigo Paint: India is a country that is witnessing rapid development with a continuous surge in infrastructure and housing construction. No matter the complexity of a project, its essence remains incomplete without the transformative touch of paint. Two companies engaged in this field are Berger Paints and Indigo Paints.

In this article, we will compare Berger Paints and Indigo Paints in detail and find out which of the two companies has better prospects for the future.

Berger Paint vs Indigo Paint

Industry Overview

paints and coatings: Currently, in the Indian paint industry, consumer preferences are gradually changing from traditional whitewashing methods to preferences for high-quality paints such as emulsion and enamel paints. This shift in consumer choice is a key driver behind the growth and stability of the Indian paint industry. The industry was valued at ₹62,000 Crore in FY23 and is expected to grow significantly by reaching a market size of ₹1 lakh Crore by FY28.

Construction Chemicals: The construction chemicals market has continued to grow in recent years and is expected to continue growing in the future. A key driver of this growth is the growing demand for construction chemicals that offer both durability and sustainability. As the construction industry prioritizes sustainable building practices, there is a growing need for chemicals that improve the longevity and resilience of structures while minimizing ecological impact.

The construction chemicals market in India is currently valued at USD 1,617.8 million in 2023 and is expected to grow at a compound annual growth rate of approximately 13.1%. By 2033, the market value is expected to reach $5,541.8 million.

We learned a little about the industry in which the company operates in the previous part. Now, for Berger Paints vs Indigo Paints comparison, let us look at the similarities and differences between the businesses.

burger paint

Berger Paints, formerly known as Hadfield’s Limited, was founded in 1923. Today, the company has become the second largest paint company in India and ranks 7th among the top 15 companies globally.

Today, the company manufactures decorative and industrial products, including interior and exterior paints, wood finishes, metal coatings, and waterproofing solutions.

In the industrial segment, the company has several renowned clients, some of which include Tata Motors, Ashok Leyland, Mahindra & Mahindra, Hero MotoCorp, Royal Enfield, Force Motors, Tata Hitachi, Crompton, Orient, Havells,

The company also had operations in 28 states and 8 union territories of India.

The company operates 25 manufacturing plants in India (including subsidiary plants), two in Nepal, and one each in Poland and Russia. We also have over 60,000 dealers and retailers and 184 stocking stations, enabling us to reach customers across the residential, commercial and industrial sectors.

indigo paint

Established in 2000, Indigo Paints Limited is an Indian multinational paint manufacturing company headquartered in Pune, Maharashtra. The company initially started out manufacturing low-cost cement paints and today has established itself as one of the strongest players in the Indian paint industry.

The company has a product portfolio covering a wide range of paints including emulsions, enamels, waterproofing solutions, wood coatings, primers, putties and cement paints. The company also acquired a 51% stake in Apple Chemie, gaining expertise in waterproofing and construction chemicals.

The company operates through five manufacturing facilities located in Rajasthan, Kerala and Tamil Nadu. It has an extensive dealer network of approximately 16,496 active dealers, 8,273 coloring machines and 47 warehouses across 28 states in India.

Berger Paint vs Indigo Paint – Finance

revenue growth

If we look at the financial health of both companies, we can see that both companies are steadily increasing their profits every year.

Although Berger Paints is more profitable than Indigo Paints, the latter has a higher CAGR growth from FY19 to FY23.

During FY23, Berger Paints’ operating revenue was reported at ₹10,568 Crores, a four-year CAGR of 14.91%. On the other hand, Indigo Paints’ operating revenue grew at a CAGR of 18.98% and reported operating revenue of ₹1,073.33 crores during FY23.

The table below shows the total sales growth of Berger Paints and Indigo Paints over the past five years. (The figure is Rs. Crores):

increase in net profit

Net income for both companies follows a similar trend as operating income.

From FY19 to FY23, Berger Paints and Indigo Paints grew at a CAGR of 14.87% and 48.86%, respectively. During FY23, Berger Paints reported a net profit of ₹860 crores and Indigo Paints reported a net profit margin of ₹131.93 crores.

The figures below highlight the net profit growth of Berger Paints and Indigo Paints over the past five years. (Rs. Crores figure).

profit

Comparing the companies’ operating profits, you can see that Indigo Paint’s operating profit ratio is better than Berger Paint’s operating profit ratio.

Berger Paints’ margins were hit hard by high raw material costs in the first half of FY23. On the other hand, Indigo Paint’s margin increase was the result of a differentiated product mix, aggressive cost optimization measures, and raw material cost reduction.

During FY23, Berger Paints and Indigo Paints reported operating profit margins of 11.45% and 16.91%, respectively.

The figures below compare the operating profit margins of Berger Paints and Indigo Paints over the last five financial years.

The net profit margins of the two companies are showing a similar trend to their operating profit margins. In comparison, Indigo Paints has a net profit margin of 12.18%, which is higher than Berger Paints’ margin of 8.14%.

The figures below compare the net profit margins of Berger Paints and Indigo Paints over the last five financial years.

rate of return

Looking at the returns, we can see that Berger Paints gave shareholders a better return on the capital invested than Indigo Paints. During FY23, Berger Paints reported an ROE of 20.40% and Indigo Paints reported an ROE of 17%.

The picture below highlights the RoE of Berger Paints and Indigo Paints over the past five years.

ROCE for both companies followed a similar trend as RoE. During FY23, Berger Paints reported an ROCE of 25.60% and Indigo Paints reported an ROCE of 20.90%.

The figure below highlights the ROCE of Berger Paints and Indigo Paints over the past five years.

leverage ratio

The debt ratios of both companies over the past five years are showing positive signs.

Over the years, Berger Paints has maintained a low debt-to-equity ratio, which indicates that the company primarily uses its funds to run its business.

For Indigo Paints, the company’s debt to equity ratio has been zero for the last three financial years. This indicates that the company has no debt.

The figures below highlight the debt-to-equity ratios of Berger Paints and Indigo Paints over the past five years.

Berger Paint vs. Indigo Paint – What’s Next?

So far, we have studied the financial statements of companies and understood the performance of each company. Now, let’s take a look at the future of both companies and see what they have in store.

burger paint

1. The company plans to strengthen its retail touchpoints by adding 8,000 retailers by FY23.
2. The company launched several innovative products during FY23 and has more products in the pipeline.
3. The company has successfully set up its largest manufacturing facility in Sandila with an investment of ₹1037 Crores.
4. The company has a manufacturing facility with rooftop solar power projects. The recently commissioned Sandila power plant can run entirely on solar power through a rooftop solar power plant with a capacity of 2 MW.
5. The company entered the construction chemicals business and, together with its subsidiary STP Ltd., achieved a turnover of ₹1000 crore.

indigo paint

1. The company acquired a 51% stake in Apple Chemie, providing it with the expertise it needed for its range of waterproofing and construction chemicals.
2. The company is emphasizing advertising spending as part of its long-term brand-building strategy.
3. The company is accelerating its production capacity expansion. We are starting work on setting up a 90,000 KL per annum water-based paint plant in Jodhpur.
4. The company is expanding its portfolio of value-added products for customers in tier-1, tier-2 cities as well as smaller cities.

Berger paints and indigo paints – key indicators

The Berger Paints vs Indigo Paints comparison is almost complete. Let’s take a look at some important metrics for stocks that haven’t been included before.

as a result

These are the results from a comparative study of Berger Paints and Indigo Paints. While Berger Paint continues to deliver returns to shareholders, Indigo Paint has been growing at a faster rate than ever before.

With the plans that both companies have put in place, the outlook for both companies looks favorable for the future.

Which of the two stocks do you think is better? What can investors expect from both companies in the future? Please share your thoughts in the comments section below.

Written by Aaron Barth

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