Kansai Nerolac Paints Ltd. share price target

Kansai's results were lower than our estimates. Revenue rose a mere 4.5% YoY to `11.5bn subdued performance after seven quarters of double digit growth. The decorative segment volume growth was in high single digit, but industrial segment fell 5% due to automobile industry slowdown. Given continued pressure in auto sales volume, we believe the industrial segment will continue to be impacted. We have revised our FY20E and FY21E revenue estimates to factor in lower growth in the automotive business....

Kansai Nerolac (KNL) recorded strong topline growth of ~18% led by volume growth of ~14% (I-direct estimate). The volume growth was largely driven by strong festive demand of decorative paints but industrial paint (topline contribution of ~45%) offtake remain sluggish due to inferior automotive paint demand from its key client. On the margin front, gross margin stayed under pressure (down 550 bps YoY) mainly due to higher raw material prices and inability to pass on higher raw material prices in the industrial paint category. As...

Expect QoQ margin expansion given decline in input costs and stable USD/INR We retain positive view and Accumulate rating on Kansai given strong decorative volume growth of 21% despite 10% volume growth in Industrial paints and gross margin decline of 550bps YoY and 200Bps QoQ. We believe that Inputs cost pressures have peaked out and expect QoQ margin...

Kansai Nerolac's (KNL) Q2FY19 performance was largely hit by higher raw material prices leading to ~466 bps YoY fall in gross margin. Overall volume growth at ~9% in Q2FY19 was led by decorative paint segment due to pre-festive placements at dealer's level. However, we believe slower industrial paint volume growth was mainly due to inferior automotive paint demand from its key client. KNL expects double digit volume growth across the paint category led by the decorative segment in the next two years owing...

across segments led by decorative segment. Management commented that raw material price inflation, volatility in crude prices and INR depreciation was more pronounced this quarter which impacted the operating margins....

Kansai Nerolac's (KNL) strong volume growth of ~16% YoY (vs. Idirect estimate: ~10%) was led by strong performance in both decorative and industrial segments. A marginal growth in realisation by ~1% YoY (largely into decorative paint category) was to offset higher raw material prices. For FY18, KNL has taken a price hike of ~4% in the decorative paint category (in two phases). Also, according to the management, it would take price hike in the industrial paint category after consultation with top clients. KNL expects double digit volume growth across the paint category led by...

ICICI Securities Ltd | Retail Equity Research Kansai Nerolac's (KNL) strong volume growth of 14.5% YoY (vs. Idirect estimate: 11%) was led by both decorative and industrial segment equally. This coupled with price hike of ~2% YoY (largely into decorative paint category) was to offset higher raw material prices. For FY18, the company has taken a price hike of ~4% in the decorative paint category (in two phases). Also, KNL has decided to take a price hike in the industrial paint category on a case to case basis. The company expects double digit volume growth across the...

We recently interacted with the management of Kansai Nerolac Paints (KNPL) to understand the developments in the company and in the sector. KNPL has been experiencing double digit volume YoY growth across segments since the last 12 quarters surpassing the performance of Asian Paints and Berger. The strong out-performance is on the back of: 1) Strong volume growth witnessed by the paint sector; 2) New and innovative product launches by the company; 3) Strong distribution network of the company (20000+ dealers and 102 depots);4) Heavy promotion through...

KNPL has been experiencing double digit volume YoY growth across segments since the last 12 quarters surpassing the performance of Asian Paints and Berger. The strong out-performance is on the back of: 1) Strong volume growth witnessed by the paint sector;2) New and innovative product launches by the company; 3) Strong distribution network of the company (20000+ dealers and 102 depots);4) Heavy promotion through multiple media platforms and 5) Sales aggression exhibited by the company. Management (and we agree) expect the growth momentum to continue in medium term as well with increasing disposable income,...

ICICI Securities Ltd | Retail Equity Research Kansai Nerolac (KNL) continued recorded strong volume growth of ~13% YoY (I-direct estimate) led by ~14%, ~11% YoY volume growth in decorative, industrial segment, respectively. The volume growth was largely on account of lower base (due to demonetisation) and in-spite of early diwali sales during Q2. However, despite rising raw material prices company has refrained to take price hike during Q3FY18, resulting flattish realisation growth....