Buy Kansai Nerolac Paints; target of Rs 335: Asit C Mehta

Asit C Mehta report on Kansai Nerolac Paints

Kansai Nerolac Paints’ promoter company, Kansai Paint Co., Ltd., Japan, hosted an investors’ meet to discuss their India market strategy under the new management. The management discussed their shorter-term (3 years) and longer-term (till 2030) business strategy in detail. While most of the focus areas and aspirations have seen continuity, a stronger long-term margin aspiration points to sustained performance improvement. Strategy continuity under new MD, no major pivots from earlier focus areas The industrial segment will be the key growth driver, the automotive segment will see a steady trajectory driven by innovation, while in the decorative segment, the company will prioritise stability through a focus on strong regions, projects segment and premiumisation. Within decorative, focus will be more on the relatively new business segments with a higher growth headroom, namely projects, construction chemicals and wood coatings.

Outlook

We roll over our valuation to FY27E EPS of Rs 11.2, and retain our P/E multiple at 30x, arriving at a price target of Rs 335. With an upside potential of 29.8%, we retain a ‘BUY’ rating on the shares of Kansai Nerolac Paints Ltd.

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