Kansai Nerolac Paints (500165) investor relations material

Executive summary

• Achieved consolidated net revenue growth of 9.8% year-over-year for Q1 FY27, with standalone revenue up 10.2% to ₹2,299.52 crore and strong demand in both decorative and industrial segments despite geopolitical challenges.

• Decorative segment saw high single-digit value growth, while industrial and automotive coatings delivered double-digit growth, supported by innovation, premiumization, and network expansion.

• Launched new products in decorative and industrial coatings, emphasizing sustainability, advanced technology, and premium offerings.

• Maintained strong brand recall, significant investments in advertising and digital marketing, and enhanced ESG profile with multiple awards.

• Implemented price increases to partially offset raw material inflation and rupee depreciation.

Financial highlights

• Standalone net revenue grew 10.2% year-over-year to ₹2,299.52 crore; consolidated revenue up 9.8% to ₹2,373.59 crore.

• Standalone PAT increased 5.0% to ₹242.34 crore; consolidated PAT up 6.0% to ₹228.41 crore.

• EBITDA grew 7.7% year-over-year to ₹335.89 crore; PBDIT margin at 14.6% (standalone) and 13.8% (consolidated).

• Gross margin saw a 1.3% reduction due to lag in industrial price increases, with material costs rising to 65.0% of revenue.

• Basic EPS (standalone) was ₹3.00, up from ₹2.86 in Q1 last year.

Outlook and guidance

• Margin guidance for FY27 is retained, with efforts to maintain 13%-14% margins despite inflationary pressures and ongoing price hikes.

• Management expects continued strong demand in both decorative and industrial segments, with festive demand boosted by a later Diwali.

• Infrastructure, construction, and automotive demand expected to remain strong, with ongoing monitoring of geopolitical and inflationary risks.

• Medium-term goal to achieve margins above 14% through premiumization and fixed cost leverage.