HDFC Securities' research report on Kansai Nerolac
Kansai Nerolac’s (KNPL) standalone revenue growth was a tepid 1% at 17.2bn. (3-year CAGR: 11%; HSIE: INR18.4bn). In the decorative segment, volume and realisation are estimated to have clocked -7% and 3% growth resp YoY in Q3. Underperformance vis-a-vis the top-2 continues and management intends to focus on recouping lost share by 1. Increasing salience in premium products, and 2. Flexing the marketing lever going forward. The industrial segment outpaced portfolio growth (HSIE: 12-13%). Profitability missed estimates too. (GM/EBITDAM at 30.2%/11% vs HSIE: 31.1/13.5%).
We largely maintain FY24/25 EPS estimates and our BUY rating with an unchanged DCF-based TP of INR500/sh (implying 34x Dec-24 P/E).
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