Prabhudas Lilladher has given Buy recommendation for Kansai Nerolac Paints with a target price of Rs. 653 in its research report issued on Feb 03, 2021

Prabhudas Lilladher’s research report on Kansai Nerolac Paints

We increase FY21/22/23 EPS estimates by 7.8%/ 10.4% / 7.2% due to high double digit growth in decorative segment on the back of strong demand post un-lock and strong pickup in Automotive, other Industrial coatings, waterproofing and Adhesive segments. KNPL registered strong volume growth led by recovery in metro and tier 1 cities along with sustained growth in tier 2,3,4 cities and rural towns. KNPL gained due to higher gross margins, better product mix and judicious cost control, however we expect margins to soften due to firm RM prices despite planned price increase across segments. We remain positive in the long term story for KNPL led by decorative paints demand (shift towards organized sector, housing push in Tier2/3 cities and shorter painting cycle) and gradual recovery in auto paints (rising demand for personal mobility) and emerging segments like powder coatings (appliances), infra coatings, transport/metros, rebar and Industrial applications.


KNPL trades at 37.1xFY23 EPS which is at 30% discount to FY23 PE of APNT (53.5x) v/s historical average of 15%. Assign Buy with a target price of Rs653 (42xFY23 EPS).