Kansai Nerolac jumps 10% on management's optimistic demand recovery outlook

Going ahead, the management expects favorable monsoon demand to improve for decoratives segment

Shares of Kansai Nerolac soared over 10 percent to Rs 310 per share on July 30, following management's optimistic outlook for strong demand in the upcoming quarters due to favorable monsoon trends, despite the company having a subdued performance in the April-June quarter (Q1FY25).

So far this year, the stock of this paints player declined over 6 percent, underperforming benchmark Nifty 50's 14 percent rise. Earlier, Kansai Nerolac shares had hit Rs 355 apiece on December 27, 2023.

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Kansai Nerolac's consolidated net profit fell by 68.7 percent year-on-year (YoY) to Rs 230 crore in Q1FY25, while consolidated revenue from operations fell by a modest 1.1 percent YoY to Rs 2,133 crore.

Going ahead, the management expects favorable monsoon demand to improve for the decoratives segment, whereas performance coatings would improve based on continued thrust on infrastructure growth, new projects and order pipelines.

"The quarter continued to witness good demand for Automotive Coatings. Demand for Decorative was muted due to unprecedent heat wave, labor shortages and elections. Demand for Performance Coating was subdued however it picked up in June. A combination of measures like cost control, product mix and procurement efficiencies helped improve gross margins over the corresponding quarter last year. Raw material prices have now
gradually started to harden due to various geopolitical issues. The company is actively taking steps to mitigate this cost increase," said Anuj Jain, Managing Director, Kansai Nerolac Paints.

The size of the domestic paint industry is estimated at around Rs 75,000 crore as of March 2024. The good growth in infrastructure, core sector as well as automobile and real estate is likely to have a positive effect on the overall demand for paint for the industry in the long run.

Kansai Nerolac is one of the leading paint companies in India and is the leader in Industrial paints. The company has eight strategically located
manufacturing units all over India and a strong dealer network across the country.

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