Kansai Nerolac Q1 Review: PL Capital Retains 'Add' On Favorable Risk-Reward — Check Target Price
Kansai's Q2 to see better deco demand, auto to see single digit, non-auto industrial segment is likely to see high single digit value growth in FY26, adds the brokerage.
Kansai' Q1 revenues grew by 1.8% YoY to Rs 20.9 billion (our estimate: Rs 21.3 billion). Gross margins contracted by 89 bps YoY to 36.1% (our estimate: 36%). Ebitda declined by 6.7% YoY to Rs 3.1 billion (our estimate:Rs 3.36 billion); Margins contracted by 136 bps YoY to 14.9% (our estimate:15.8%). Adjusted PAT declined by 4.3% YoY to Rs 2.30 billion (our estimate:Rs 2.39 billion).
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PL Capital Report
Kansai Nerolac Paints Ltd. provides a favorable risk reward in near term given-
strong growth of industrial paints which is 45% of its sales (highest industrial paints share in Industry),
likely pick up in Q2 decorative volumes due to early Diwali and sustained gains from paint+ innovations and
guidance of steady 13-14% Ebitda margin led by better product mix and improving demand scenario.
Kansai Nerolac plans to maintain its decorative market share led by-
Innovations and new launches under Paint + initiatives (12% of sales)
distribution improvement in Nextgen Nerolac Shoppe (400 added in Q1 FY26),
rising scale and focus on projects business,
loyalty and influencer program.
Outlook in non-auto industrials remains positive led by strong order pipeline across Infra, railways and powder coatings etc.
We expect 6/8% volume growth and 100bps margin expansion over FY25-27. We estimate a CAGR of 5.6% in sales and 9.8% in PAT over FY25-27. We value the stock at 28xMar27 EPS (No change) and assign a target price of Rs 277 (Rs 284 earlier). Retain Accumulate.
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