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Asian Paints vs Berger Paints: Stock Returns

The Paint sector has performed very well in the last couple of years in India, inspite of economic slowdown that has affected most other sectors.

Asian Paints has been one of the best performing stocks this year, giving returns in excess of 30% in 2019. The company, which has dominated the paint business since 1967, has created huge wealth for its shareholders.

A small sum of ₹ 10,000 invested in Asian Paints in the year 2000, would’ve risen in value to ₹ 7.7 lakhs today – returns of 24.26% CAGR, without including dividends. A 1 lakh rupee investment 20 years ago, would be 7.7 crore today!

But has Asian Paints given the best returns in the Paint sector in the last 10 years? How does the No 2 player, Berger Paints, perform in comparison?

The results are surprising!

Berger Paints has outperformed Asian Paints and given much better returns to its shareholders.

Asian Paints vs Berger Paints Returns:

Asian Paints
Stock Price
Returns
(CAGR)
10 Years Ago₹ 17426.39%
5 Years Ago₹ 73519.75%
3 Years Ago₹ 87827.27%
1 Year Ago₹ 136432.70%
Today (Dec 2019)₹ 1810
Berger Paints
Stock Price
Returns
(CAGR)
10 Years Ago₹ 2137.57%
5 Years Ago₹ 14428.78%
3 Years Ago₹ 20236.17%
1 Year Ago₹ 32755.96%
Today (Dec 2019)₹ 510

10 Years Ago:

  • If you had invested ₹ 1 lakh in Asian Paints, the value of your investment today would be ₹ 10.4 lakhs.
  • If you had invested ₹ 1 lakh in Berger Paints, the value today would be ₹ 24.29 lakhs.
  • If you had invested ₹ 2 lakhs equally in Asian Paints and Berger Paints, the value today would be ₹ 34.69 lakhs! By investing in top two companies in the same sector, you not only manage your risk by spreading out your investment, but you could also get excellent returns.
  • In comparison, if the same 1 lakh was invested in Fixed Deposit (FD) 10 years ago, the value of your investment would be just ₹ 2.26 lakhs.

Why Berger Paints has delivered better returns than Asian Paints?

  • The reasons could be many, but 10 years ago, Berger Paints was a much smaller company with lower margins. Investors had lower confidence in the company, as compared to Asian Paints which has been a household name for decades.
  • In 2008, Berger had operating margins of 10%, whereas market leader Asian Paints commanded 16%. Today, Berger has managed to bring it closer with margins of 16% as compared to 20% of Asian Paints.
  • Sales and Profit growth of Berger Paints has also been consistently better than Asian Paints in the last 10 years.

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