Kansai Nerolac Paints trades lower on profit taking after strong Q2 numbers

Kansai Nerolac dropped nearly a percent on November 2 morning as investors booked profit, a day after the paint company registered a 56 percent year-on-year jump in profit in the September quarter at Rs 177 crore.

Kansai Nerolac Paints’ profit grew despite tepid growth in topline, driven by strong operating performance with a fall in input cost. Revenue grew by 1.3 percent on-year at Rs 1,957 crore, the company said on November 2 in an after-market-hours announcement.

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The size of India’s domestic paint industry was estimated at around Rs 70,000 crore as of March 2023. The good growth in infrastructure, core sector as well as automobile and real estate is likely to have a positive effect on the overall demand for the industry in the long run.

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In a recent report, brokerage firm Macquarie assigned a “neutral” rating to Kansai Nerolac with a target of Rs 435 a share, implying a nearly 40 percent upside from the current market price.

“In Q1, they observed a 3.5 percent growth in decorative sales and a 10 percent growth in industrial sales. They are awaiting clarity on when the company anticipates the benefits of their initiatives to impact decorative growth,” it said.

At 11.37 am, the stock was trading at Rs 314.24 on NSE, 0.87 percent lower from the previous close.

Kansai Nerolac stock has given a return of 24.12 percent over the last six months. The benchmark Nifty50 index has given a return of 4.65 percent over the same duration.

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