Accumulate Kansai Nerolac Paints; target of Rs 277: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Kansai Nerolac Paints with a target price of Rs 277 in its research report dated August 05, 2025.

Broker Research

August 05, 2025 / 15:26 IST

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Prabhudas Lilladher's research report on Kansai Nerolac Paints

Kansai provides a favorable risk reward in near term given 1) strong growth of industrial paints which is 45% of its sales (highest industrial paints share in Industry) 2) likely pick up in 2Q decorative volumes due to early Diwali and sustained gains from paint+ innovations and 3) guidance of steady 13-14% EBITDA margin led by better product mix and improving demand scenario. KNPL plans to maintain its decorative market share led by 1) Innovations and new launches under Paint + initiatives (12% of sales) 2) distribution improvement in Nextgen Nerolac Shoppe (400 added in 1Q26) 3) rising scale and focus on projects business 4) loyalty and influencer program. Outlook in non-auto industrials remains positive led by strong order pipeline across Infra, Railways and Powder coatings etc.

Outlook

We expect 6/8% volume growth and 100bps margin expansion over FY25-27. We estimate a CAGR of 5.6% in sales and 9.8% in PAT over FY25-27. We value the stock at 28xMar27 EPS (No change) and assign a target price of Rs277 (Rs284 earlier). Retain Accumulate.

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