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ICICI Securities Report
Kansai Nerolac Paints Ltd.'s Q1 FY21 reported revenue, Ebitda and profit after tax decline of 58.6%, 69.7% and 79.5%, respectively.
While gross margin expanded 320 basis points due to lower input prices and higher revenue share of decoratives, Ebitda margin declined 440 basis points due to stable fixed costs.
Employee cost and Other expenditure as percentage of net sales were up 670 basis points and 90 basis points, respectively.
Kansai Nerolac initiated some cost saving programs and advertisement spend was also lower (Our view).
While April 2020 was completely washout due to lockdown, there was double digit volume growth in decorative paints in May and June 2020.
We believe there was some pent up demand as well as likely channel filing. Industrial paints (including automotive paints) continued to revenue report decline even in May-June 2020.
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