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Steady demand outlook across deco & industrial

We increase our FY27/FY28 EPS estimates by 4.5%/2.0% led by

1) healthy H2 outlook driven by strong festive season

2) EBITDA margin guidance of 13-14% despite geopolitical volatility

3) sustained healthy traction in auto/industrial paints.

KNPL has announced a Rs6bn capex towards automotive powder coatings, including backward integration into automotive paints through resin manufacturing. The capex will be incurred over ~2-2.5 years, in addition to the regular annual capex of Rs1.5-2bn. Management expects ROCE of 15-18%, with potential upside in yield.

KNPL’s focus on decorative innovations, increasing distribution, project business and increasing share in total pie remains intact. We expect 7.3% volume CAGR and ~80bps margin expansion over FY26-28. We estimate a CAGR of 8.6% in sales and 10.9% in EPS over FY26-28 and value the stock at 25xJun28 EPS which gives a target price of Rs259 (Rs248 earlier). KNPL trades at inexpensive valuations of 20.2xFY28 EPS which caps downside in the stock. Retain Accumulate.

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