BENGALURU (Reuters) – India’s Kansai Nerolac Paints reported a bigger profit for the fourth consecutive quarter on Monday, boosted by strong demand for decorative and industrial coatings.
The company, owned by Japan’s Kansai Paint Co, said consolidated net profit rose 40% year-over-year to 1.54 billion rupees ($18.5 million) in the third quarter.
Revenue from operations rose 5% to 19.19 billion rupees.
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KEY CONTEXT
Paintmakers have benefited from growing activity in the country’s real estate sector and an easing in prices of crude, a key raw material that accounts for about a third of input costs.
Kansai Nerolac said it expects rural demand to pick up going forward, although larger peer Asian Paints has warned that demand may soften in the next two quarters as buyers defer home painting plans.
Besides that, there is stiff competition from the rivals such as Berger Paints and Indigo Paints, while the likes of Pidilite Industries and J.K. Cement also preparing to enter the sector.
PEER COMPARISON
Valuation (next Estimates (next 12 Analysts’ sentiment
12 months) months)
RIC PE EV/EBITDA Revenue Profit Mean # of Stock to Div
growth % growth % rating* analyst price yield
s target (%)
**
Kansai Nerolac 33.40 21.76 10.19 10.89 Hold 11 0.98 0.53
Asian Paints 49.61 33.77 9.52 6.60 Hold 33 0.89 0.90
Berger Paints 47.95 31.21 10.68 13.27 Sell 20 1.05 0.47
Indigo Paints 38.51 23.70 19.41 18.26 Hold 6 0.89 0.25
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
OCTOBER-DECEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 83.0534 Indian rupees
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Savio D’Souza)
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