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IDBI Capital Report
Kansai Nerolac Paints Ltd.'s result was below our estimates due to higher than expected inflation in raw material cost.
Demand in decorative coating business remained resilient during days when lockdown restrictions were minimal.
Positively, value growth stood higher than volume growth driven by higher contribution from emulsions.
Also, management guides to maintain focus on premium portfolio as, due to inflation, value products (like putty) will put pressure on operating margins due to inferior economics.
Inflation continues to put pressure on gross margin.
Kansai Nerolac guides for more price hikes to offset inflation going forward. However, taking price hike in industrial coatings will be relatively tougher.
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