India`s Kansai Nerolac posts Q2 profit rise on lower expenses
Indian paintmaker Kansai Nerolac reported a rise in second-quarter profit on Wednesday as a drop in raw material costs more than made up for slowing revenue growth.
The company, owned by Japan's Kansai Paint Co, said its consolidated net profit rose 56% to 1.77 billion rupees ($21.26 million) for the three months ended Sept. 30.
Revenue from operations rose 1.3% to 19.57 billion rupees, while the cost of raw materials fell more than 8%.
For further results highlights, click [FWN3C2228]
WHY IT MATTERS
Overall, the sector has been on the road to recovery, led largely by easing crude prices - a key raw material for paintmakers, comprising about 30% of their input costs.
Kansai Nerolac's profit rose in the last two quarters on robust demand for its decorative paints after a tough October-December quarter last year, when an extended monsoon hurt quarterly profit.
Peer Asian Paints also reported easing margins and a 54% rise in net profit in the September quarter, even though it missed estimates.
PEER COMPARISON
Valuation (next 12 months) Estimates (next 12 Analysts' sentiment
months)
RIC PE EV/EBIT Price/Sal Revenue Profit Mean # of Stock to Div
DA es growth growth rating* analysts price yield
target** (%)
Kansai Nerolac KANE.N 32.78 21.09 NULL 10.98 21.81 Buy 12 0.91 0.57
Paints Ltd S
Asian Paints Ltd ASPN.N 51.10 34.63 NULL 10.49 15.22 Hold 34 0.92 0.89
S
Berger Paints India BRGR.N 47.52 30.13 NULL 11.35 22.10 Sell 19 0.99 0.50
Ltd S
Indigo Paints Ltd INDG.N 38.85 24.31 NULL 19.93 15.81 Hold 7 0.85 0.25
S
* Mean of analysts' ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock's last close to analysts' mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPT STOCK PERFORMANCE
-- All data from LSEG
