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IDBI Capital Report
Kansai Nerolac Paints Ltd.'s result was below our estimates. Volume decline in decorative coatings (at down 8% versus 8% volume growth for Asian Paints Ltd.) during Q4 FY22 has been discouraging while mix deterioration (high share of low-value products) contributed towards flat value growth.
Further, market share loss in North India is a sign of weakness.
Industrial segment business also remains muted due to supply side constraints.
Kansai Nerolac's gross margin contraction has been steep for fifth consecutive quarter driven by cost inflation and inability to execute equivalent price hike in business-to-business industrial coating (45% revenue share).
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