Berger Paints - at Fair Valuation?
Berger Paints is 2nd biggest player in Indian Paints Industry after Asian Paints, with great penetration in Industrial paints segment.
The industry has been facing pressure from rising competition with entry of other players like Grasim.
As a result of missing latest quarter estimates, the share has corrected from ATH of 872 to 580 levels ~ 35% down.
I believe that Berger paints has a very strong moat, which cannot be easily replaced by a new entrant, although it might cause short term headwinds in growth.
Since 2009, it is the first time that the share has touched 200 EMA levels in weekly chart.
A breakout from the short term downward trendline can lead to slow up-move towards 800 levels again.
550 is a key support, the share is already at S3 Fibonacci level. It will be interesting to see if this correction deepens like in the case of Divis labs, or bounces back.
The industry has been facing pressure from rising competition with entry of other players like Grasim.
As a result of missing latest quarter estimates, the share has corrected from ATH of 872 to 580 levels ~ 35% down.
I believe that Berger paints has a very strong moat, which cannot be easily replaced by a new entrant, although it might cause short term headwinds in growth.
Since 2009, it is the first time that the share has touched 200 EMA levels in weekly chart.
A breakout from the short term downward trendline can lead to slow up-move towards 800 levels again.
550 is a key support, the share is already at S3 Fibonacci level. It will be interesting to see if this correction deepens like in the case of Divis labs, or bounces back.
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