Berger Paints(BSE Code 509480)

Shareholders of Berger Paints, the second largest paints maker in the decorative segment, are waiting for fiscal 2023- 24 when the company will hit and celebrate its first century. They are expecting befitting colourful celebration of the first 100 years of the prestigious company which has travelled a highly exciting journey so far. During the last five years, its sales turnover has expanded from Rs 4,122 crore in fiscal 2017 to Rs 6,800 crore in fiscal 2021, with the profit at net level taking a jump from Rs 446 crore to Rs 681 crore durng this period. Dynamic MD and CEO Abhijit Roy is keen to celebrate 100 years of the company in a big way with the company aspiring to the Rs 10,000-crore mark in sales and a corresponding jump in profits. Mr Roy is banking on value and volume to achieve this ambitious target in the company’s centennial year.

Shareholders are expecting bumper benefits but what the management offers them is anybody’s guess. A large number of shareholders expect a liberal bonus issue – not an excessive demand. The company has so far made seven bonus issues ranging in the ratio of 2:15 to 1:1. The last bonus issue was in 2016 and the management can certainly issue bonus shares after eight years. The company’s financial position is very strong, with reserves at the end of March 31, 2021 standing at Rs 3,182 crore against an equity capital of Rs 97.13 crore. In other words, Berger is certainly in a position to issue even a 1:1 bonus issue.

Some shareholders would like to have a higher dividend of 500 per cent against the 280 per cent paid for 2021. Of course, the final call is with the management.

(CMP Rs 838.60, 52 week H/L Rs 872/550, BV Rs 34.80, FV Re 01)

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Reliance Industries (BSE Code 500325)

If shareholders of Berger Paints are waiting for fiscal 2023- 24, those of Reliance Industries are awaiting for 2027 which will mark the golden jubilee of the company. After the division of the Ambani empire, this is the first major occasion when shareholders can expect exciting news and valuable goodies. No doubt Mukesh Ambani, Chairman and Managing Director, would like to celebrate the completion of the first 50 years befittingly, but how shareholders will benefit remains to be seen.

However, some highly optimistic shareholders who are close to management sources feel there are several ways in which the management can cheer shareholders. First of all, the company can issue bonus shares. Again, the company can divest the telecom and retail businesses and the scrips of these companies can be given free to shareholders. If this happens, history will repeat itself.

Just as shareholders of the company were given shares of various companies at the time of the division of the empire, current shareholders could stand to get shares of Reliance Jio, Reliance Retail and Reliance Industries in place of only one company. But what is in store for shareholders will have to wait till 2027.

(CMP Rs 2371.55, 52 week H/L Rs 2480/1830, BV Rs 1041.50, FV Rs 10)

ITC (BSE Code 500875)

Though FIIs (foreign institutional investors), FPI (foreign portfolio investor) and other institutional investors are religiously keeping away from ITC on account of ESG considerations they do not move even an inch despite all leading indices have scaled now all-time high. Interestingly, the attitude of millions of retail investors has started changing dramatically. In fact retail investors are in a celebration mood at the ITC counter.

Ignoring institutional advice retail investors have bought around 135 million shares of ITC valued at Rs. 2805 crore! Experts and analysts are surprised at the retail revolution in ITC. A knowledgeable retail investor who has already bought 5000 ITC shares in 2 to 3 installment is a angry young man. "Why such an excellent stock should be kept aside just because foreign sophisticated research agencies have discarded it just because it manufactures tobacco and cigarettes. A tobacco and cigarettes are certainly injurious to health, people should not consume them but why should the business be punished for it?”

Afterall the company is a well-managed, financially sound religiously going for all principles of corporate governance. And if smoking is bad, is drinking a habit of thorough gentlemen? The company is selling cigarette as there are buyers ready to smoke and there are governments who would like to extort as much tax as possible.

Retail investors rush to buy ITC is only due to the fact that the company is performing well and is paying handsome dividends which even the companies of leading industrialists are not distributing among their shareholders. And the retail rush is not without any solid reason behind it. The professional management of the company which is one of the best in the Indian corporate sector is credited with a view of thinking demerging some of the businesses of the conglomerate which can result in value unlocking. This is going to happen but the million dollar question is when?

But one should not be surprised if foreign research agencies and other financial institutions start following retail investors and start investing in ITC!

(CMP Rs 214.10, 52 week H/L Rs 240/163, BV Rs 49.00, FV Re 01)