Moneycontrol Be a Pro
Get App
Last Updated : Nov 05, 2019 11:23 AM IST | Source: Moneycontrol.com

Buy Kansai Nerolac Paints; target of Rs 620: ICICI Direct

ICICI Direct is bullish on Kansai Nerolac Paints has recommended buy rating on the stock with a target price of Rs 620 in its research report dated November 04, 2019.

Broker Research @moneycontrolcom
 
 
live
  • bselive
  • nselive
Volume
Todays L/H
More

ICICI Direct's research report on Kansai Nerolac Paints


Kansai Nerolac’s (KNL) Q2FY20 aggregate performance was split between a strong decorative segment (with volume and value growth of 12% and 8%, respectively) and weak industrial segment performance (de-grew 22% YoY). While the company managed growth the niche categories such as protective coating and powder segments, the unprecedented slowdown in the automotive industry dragged the overall industrial category performance during the quarter. Benign raw material prices coupled with savings in other costs helped sharp expansion in EBITDA margin by ~200 bps YoY to 17% (vs. our expectation of flattish margin of 15%). PBT remained flat at Rs 187 crore (vs. I-direct estimate: Rs 186 crore) as decline in revenue was partially offset by expansion in EBITDA margin during the period. We believe while industrial segment performance would largely depend on recovery of automotive industry, the strong demand of decorative paint would help drive revenue growth for KNL.


Outlook


We model revenue CAGR of 10% led by ~9% volume CAGR in FY19-21E led by decorative paint segment. Better gross margin coupled with saving through transition to new corporate rate tax wold drive profitability for KNL. We maintain our target price and BUY recommendation on the stock.


For all recommendations report, click here


Disclaimer: The views and investment tips expressed by investment experts/broking houses/rating agencies on moneycontrol.com are their own, and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.



Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.
First Published on Nov 5, 2019 11:23 am
Loading...
Sections
Follow us on
Available On