1
Please refer to important disclosures at the end of this report
1
1
Kansai Nerolac Paints Limited (KNPL) is a paint company. KNPL’s strong
performance continued with 12.1% sales growth despite GST led trade
destocking in Q1. In the decorative segment (55% of sales), the company
initiated several measures to strengthen the Nerolac brand. Volumes in the
decorative paints continued to grow in double digits while Industrial segment
witnessed recovery aided by strong growth in the automotive business and
demand pickup in the non industrial segment. KNPL continues to invest in new
products (acrylic exterior emulsion with mica/ marble boosters, primer putty
ready mix) and marketing across the decorative segment (current ad-spends to
6.8% vs 3-4% seen over FY01- 15). KNPL retained market leadership in the
industrial segment (45% of sales) on the back of new products such as water-
based top coat for 2W to reduce baking times and super Weather ability
Monocoat. It strengthened share in auto ancillary powder coatings while
maintaining leadership in OEM segments across fans, helmets, etc. and Cathode
Electro deposition primer. It expects revival in auto segment along with
innovations to aid growth. The company expects GST to aid demand going
forward. KNPL intends to add automated plants at Punjab, Gujarat and Andhra
Pradesh, which will improve productivity levels and enhance interface with
manufacturing IT systems. KNPL is virtually debt free and has been able to
generate hefty cashflows. It has been maintaining a healthy dividend payout of
18.81%. The company has a RoE 18.5%. Hence BUY.
BUY
CMP `455
52 Week High / Low
461/302.6
Avg. Daily Volume
18,097
Paints
Market Cap (` cr)
24,090
1
BSE Sensex
32,382
Nifty
10,021
Face Value (`)
Reuters Code
KANE.NS
KNPL:IN
1.0
Vaibhav Agrawal
022 3935 7800 Ext: 6808
vaibhav.agr[email protected]oking.com
Kansai Nerolac Paints Ltd
Others | Paints
July 27, 2017
2
Kansai Nerolac | Paints
June 5, 2017
2
Research Team Tel: 022 - 39357800 E-mail: research@angelbroking.com Website: www.angelbroking.com
DISCLAIMER
Angel Broking Private Limited (hereinafter referred to as “Angel”) is a registered Member of National Stock Exchange of India Limited,
Bombay Stock Exchange Limited and Metropolitan Stock Exchange Limited. It is also registered as a Depository Participant with CDSL
and Portfolio Manager with SEBI. It also has registration with AMFI as a Mutual Fund Distributor. Angel Broking Private Limited is a
registered entity with SEBI for Research Analyst in terms of SEBI (Research Analyst) Regulations, 2014 vide registration number
INH000000164. Angel or its associates has not been debarred/ suspended by SEBI or any other regulatory authority for accessing
/dealing in securities Market. Angel or its associates/analyst has not received any compensation / managed or co-managed public
offering of securities of the company covered by Analyst during the past twelve months.
This document is solely for the personal information of the recipient, and must not be singularly used as the basis of any investment
decision. Nothing in this document should be construed as investment or financial advice. Each recipient of this document should
make such investigations as they deem necessary to arrive at an independent evaluation of an investment in the securities of the
companies referred to in this document (including the merits and risks involved), and should consult their own advisors to determine
the merits and risks of such an investment.
Reports based on technical and derivative analysis center on studying charts of a stock's price movement, outstanding positions and
trading volume, as opposed to focusing on a company's fundamentals and, as such, may not match with a report on a company's
fundamentals. Investors are advised to refer the Fundamental and Technical Research Reports available on our website to evaluate the
contrary view, if any.
The information in this document has been printed on the basis of publicly available information, internal data and other reliable
sources believed to be true, but we do not represent that it is accurate or complete and it should not be relied on as such, as this
document is for general guidance only. Angel Broking Pvt. Limited or any of its affiliates/ group companies shall not be in any way
responsible for any loss or damage that may arise to any person from any inadvertent error in the information contained in this report.
Angel Broking Pvt. Limited has not independently verified all the information contained within this document. Accordingly, we cannot
testify, nor make any representation or warranty, express or implied, to the accuracy, contents or data contained within this document.
While Angel Broking Pvt. Limited endeavors to update on a reasonable basis the information discussed in this material, there may be
regulatory, compliance, or other reasons that prevent us from doing so.
This document is being supplied to you solely for your information, and its contents, information or data may not be reproduced,
redistributed or passed on, directly or indirectly.
Neither Angel Broking Pvt. Limited, nor its directors, employees or affiliates shall be liable for any loss or damage that may arise from
or in connection with the use of this information.
Disclosure of Interest Statement Kansai Nerolac
1. Financial interest of research analyst or Angel or his Associate or his relative No
2. Ownership of 1% or more of the stock by research analyst or Angel or associates or relatives No
3. Served as an officer, director or employee of the company covered under Research No
4. Broking relationship with company covered under Research No
Ratings (Based on expected returns Buy (> 15%) Accumulate (5% to 15%) Neutral (-5 to 5%)
over 12 months investment period): Reduce (-5% to -15%) Sell (< -15)