Kotak Securities is bullish on Kansai Nerolac Paints Ltd has recommended buy rating on the stock with a target price of Rs 600 in its research report dated February 27, 2018.
Kotak Securities's research report on Kansai Nerolac Paints Ltd
We recently interacted with the management of Kansai Nerolac Paints (KNPL) to understand the developments in the company and in the sector.KNPL has been experiencing double digit volume YoY growth across segments since the last 12 quarters surpassing the performance of Asian Paints and Berger. The strong out-performance is on the back of: 1) Strong volume growth witnessed by the paint sector;2) New and innovative product launches by the company; 3) Strong distribution network of the company (20000+ dealers and 102 depots)
OutlookFor KNPL, we estimate 9% volume CAGR over FY17 – FY20E with stable margins and ROE of ~23.3% and ROCE of ~34.5% for FY20E. Maintain BUY with an unchanged TP of Rs 600 at 44x FY20E earnings.
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