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ICICI Securities Report
While Kansai Nerolac Paints Ltd.'s Q2 FY23 was weaker than consensus and our estimates, we note certain positives as-
the company has increased its brand building spends. We model the benefits with a lag of two-three quarters,
recovery in automotive paints will likely ensure superior revenue growth versus peers and lead to benefits of operating leverage and
with expected price hikes from auto original equipment manufacturers, the Ebitda margins have bottomed out, in our view.
Kansai is focusing on resolving issues that led to its underperformance versus peers. It plans to increase share of voice, premiumise the portfolio, defocus some of the low margin products and expand distribution.
While we note Kansai is on right track, we model the restructuring process to impact earnings in near term.
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