Accumulate Kansai Nerolac Paints; target of Rs 248: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Kansai Nerolac Paints with a target price of Rs 248 in its research report dated February 04, 2026.

Broker Research

February 05, 2026 / 13:03 IST

Accumulate

Prabhudas Lilladher's research report on Kansai Nerolac Paints

We cut our FY27/FY28 EPS estimates by 4.1%/5.6% given 1) impact of labor code change on employee cost by 70-80bps. 2) sustained competitive intensity in decorative paints 3) subdued demand outlook in decorative paints and 4) higher growth in lower margin auto and general industrial paints. However Kansai has given cautiously optimistic outlook in near term given 1) strong growth in industrial paints, both automotive and general industrial (45% of its sales, highest contribution in Industry) 2) likely pick up in 4Q decorative volumes led by favorable macro environment and sustained gains from paint+ innovations and 3) sustained margin guidance of 13-14% led by better product mix in decorative paints. We expect 8.4% volume CAGR growth and ~50bps margin expansion over FY26-28.

Outlook

We estimate a CAGR of 6.4% in sales and 7.9% in PAT over FY26-28. We value the stock at 26xDec27 EPS (No change) and assign a target price of Rs248 (Rs255 earlier). While the valuations at 23.5XFY28 have little room for further de-rating, it lacks any meaningful triggers. Retain Accumulate.

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