Accumulate Kansai Nerolac Paints; target of Rs 288: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Kansai Nerolac Paints with a target price of Rs 288 in its research report dated April 21, 2025.

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April 21, 2025 / 12:15 IST

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Prabhudas Lilladher's research report on Kansai Nerolac Paints

We attended the Kansai India business strategy call (Part of Kansai Paint Japan, call), where the management indicated strong growth in non - decorative business led by sustain high growth in Automotive Paints, Auto refinishes, Powder coatings and sustained traction and new launches backed by innovation and Kansai’s technological edge across emerging segments. KNPL plans to grow sales by 9% with 14-15% margins in near to medium term and is looking at 10% sales CAGR with 18-19% margins by 2030 (18.3% peak margin in FY17). The Industrial segment will focus on growth, while the Auto and Decorative segments will strategically aim for innovation and stability. Rural markets continue to outperform urban areas, overall, the Decorative business is expected to recover in the medium term. Although competitive intensity is expected to remain high, KNPL remains confident of stability over the next 9–12 months, supported by technological advancements and a stabilizing macro environment.

Outlook

KNPL’s 2030 growth and margin vision seem quite encouraging which can result in growth faster than estimates. Although decorative business is uncertain in near term, valuations at 27.1x FY26 and 25.1x FY27 EPS with 9.9% EPS CAGR factor in most negatives. Upgrade to Accumulate with TP of Rs 288 (28xFY27 v/s 278 based on 27xFY27 earlier).

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