Kansai Nerolac Paints Q3 Results: Profit Jumps Over Fourfold
Kansai Nerolac Paints Ltd.'s net profit jumped over four times in the third quarter of the current financial year due to an exceptional gain, beating analysts' estimates.
The paint company posted a profit of Rs 680.9 crore in the quarter ended December as compared to Rs 154.3 crore in the year-ago period, according to an exchange filing on Wednesday. Analysts tracked by Bloomberg had a consensus estimate of Rs 141 crore.
Kansai Nerolac Q3 FY25 Highlights (Consolidated, YoY)
Revenue up 0.2% to Rs 1,921.9 crore versus Rs 1,918.7 crore (Bloomberg estimate: Rs 1,932 crore).
Ebitda down 4% to Rs 235.1 crore versus Rs 244 crore (Estimate: Rs 222 crore)
Margin narrows to 12.2% versus 12.7% (Estimate: 11.50%)
Net profit at Rs 680.9 crore versus Rs 154.3 crore (Estimate: Rs 141 crore)
The exceptional items include net profit on the sale of land at Lower Parel in Mumbai for Rs 665.4 crore and a provision of Rs 186.3 crore for impairment for its long-term investment, loan, receivables and financial guarantees in its subsidiaries in Bangladesh and Sri Lanka.
The strong growth in infrastructure, core sectors, and the automobile and real-estate industries is expected to positively impact the demand for paint in the long term, according to a press release.
"The company continued to see good growth in paint+ products, projects, wood coatings and construction chemicals," Managing Director Anuj Jain said. "Demand in decorative was impacted due to higher inflation, leading to lower spend on discretionary products and tight liquidity."
Jain anticipates that the recent budget announcements would help improve the consumption cycle, which would positively impact demand.
Shares of Kansai Nerolac closed 1.01% lower at 245.16 apiece on the National Stock Exchange, compared to a 0.18% fall in the benchmark Nifty. The stock has declined 28.77% in the last 12 months.
Out of the 19 analysts tracking the company, seven maintain a 'buy' rating on the stock, four recommend 'hold' and eight suggest 'sell', according to Bloomberg data. The average of 12-month analysts' price targets implies a potential upside of 19.8%.
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