Kansai reported income progress of two.7% YoY. Nevertheless, Ebitda and adjusted PAT declined 7.4% and seven.2%, respectively YoY. Gross margin expanded 22 bps with correction in commodity costs. Even so, Ebitda margin contracted 99 bps YoY because of larger workers price and different expenditure as % of internet gross sales. ICICI Securities believes, there may be damaging impression of working leverage with 10 straight quarters of low-single-digit YoY income progress.
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ICICI Securities Report
Kansai Nerolac Paints Ltd. has been focussing on introducing a number of new merchandise/applied sciences in industrial coatings over the previous two–three years. This has led to market share beneficial properties in automotive coatings and powerful progress in protecting coatings.
We like Kansai’s technique to give attention to market share beneficial properties in industrial coatings (much less aggressive phase) given competitors has intensified materially in ornamental paints. We additionally like its aggressive give attention to growth of share-of-voice and new launches to strengthen ornamental paints.
With correction in commodity costs and FY25’s beneficial base, we see Kansai’s FY26E income/PAT progress in mid-single-digits. QoQ restoration in offtake of ornamental paints and sustained progress in initiatives phase additionally augur effectively.
Sale of land parcels at Thane and Parel (Mumbai) ought to drive different revenue larger. Keep Add.
We reckon [comfortable] aggressive equilibrium in paints is probably going damaged. Retain underweight on massive cap paints. Contrarian buyers could contemplate proudly owning Akzo Nobel/Indigo Paints/Kansai Nerolac.
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