Kansai Nerolac - Q2FY21 First Cut - ICICI Securities

(CMP: Rs. 513; MCap: Rs. 27649 crore)

Kansai Nerolac reported a healthy set of Q2FY21 numbers led by double digit decorative volume growth and a notable expansion in EBITDA margin.

Q2FY21 Earnings Summary

- Kansai Nerolac's net revenue came in at ~Rs. 1288 crore up by ~4% YoY (Vs I-direct estimate of Rs. 1303 crore) led by high double digit volume growth in the decorative paint segment. Industrial paint demand remained muted during maximum part of the quarter owing to covid-19 related challenges. However, demand of industrial paints improved from September'20 onwards

- Benign raw material prices help drive gross margin up by 90 bps YoY. This along with various cost optimisation measures helped drive EBITDA margin up by 300 bps YoY to 20% (Vs Il-direct estimate 18.4%)

- PBT during the period up by ~17% YoY to ~Rs. 219 crore (Vs I-direct estimate: Rs. ~210 crore). However, PAT declined by 18% YoY to ~Rs. 159 crore (Vs I-direct estimate: Rs. 157 crore) mainly due to tax reversal benefit in the base period

The company has witnessed a strong recovery in the business post ease in lockdown restrictions led by strong double digit volume growth in the decorative paint segment. This along with cost control measures to safeguard margin is encouraging. We maintain our positive stance on the stock and will release our report post review of our estimates.

Shares of KANSAI NEROLAC PAINTS LTD. was last trading in BSE at Rs.513.05 as compared to the previous close of Rs. 513.8. The total number of shares traded during the day was 11259 in over 1217 trades.

The stock hit an intraday high of Rs. 519.05 and intraday low of 504.25. The net turnover during the day was Rs. 5768573.

Source : Equity Bulls

Keywords