Accumulate Kansai Nerolac Paints; target of Rs 351: Prabhudas Lilladher

Prabhudas Lilladher recommended accumulate rating on Kansai Nerolac Paints with a target price of Rs 351 in its research report dated August 04, 2023.

Broker Research

August 07, 2023 / 21:23 IST

Accumulate

26 Aug, 2025 12:21

Volume

Todays L/H

Prabhudas Lilladher's research report on Kansai Nerolac Paints

We are increasing our FY24/25 EPS estimates by 7.1%/6.8% and target price to Rs351 (Rs328 earlier at 32xFY25E EPS) following positive outlook led by 1) steady growth in decorative segment 2) expected 2W recovery in auto segment and 3) strong growth outlook for non-auto industrial paints. We believe Kansai is making right moves with 1) new variants in Impression Kashmir (high/mid sheen and matt) 2) complete product range in waterproofing supported with higher feet on street 3) focus on premium finishes and 4) emerging segments in EV, Premium Appliances, New ancillary products, Alloy wheels and Railways. The company expects increase in competitive intensity post entry of Grasim, but new entrant will grow market & penetration (50-55%) and gain share from smaller unorganized players. We expect margins improvement to continue as higher cost inventory has been exhausted and demand environment has been steady.

Outlook

We estimate 423bps EBITDA margin expansion and 38.4% PAT CAGR over FY23-25 on a depleted base. Incremental market share loss and increasing competition from Grasim/JSW and JK Cement remains a key risk to our call. Accumulate.

For all recommendations report, click here