Earnings Outlook
Kansai Nerolac PAT seen down on year despite revenue rise
This story was originally published at 20:59 IST on 2 August 2025
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By Shravani Chandiwade
MUMBAI - Kansai Nerolac Paints Ltd. is expected to report a year-on-year fall in its net profit for the June quarter but sequentially the profit is likely to be sharply up due to softer crude oil prices and a low base.
The company's net profit for the June quarter is estimated at INR 2.23 billion, down 7% on year but up 81% sequentially, according to an average of estimates from seven brokerage firms. The significant quarterly growth in the company's bottom line is mainly due to a favourable base, as profit in the March quarter was only INR 1.23 billion. The highest estimate for the company's net profit in the latest quarter is INR 2.43 billion from Nomura Equity Research and the lowest estimate is INR 1.89 billion from Systematix Shares and Stocks (India) Ltd.
The company's revenue is estimated at INR 21.70 billion, up 6% on year and 25% higher on quarter, according to the average of estimates from the seven brokerage firms. The highest estimate for net revenue is INR 22.32 billion from Nomura Equity and the lowest is INR 21.12 billion from Anand Rathi Share and Stock Brokers Ltd.
The company operates in two segments, decorative paints and industrial paints. The revenue is expected to grow due to high volume growth for its paints in decorative segment. The company is also expected to see gradual recovery in demand in the decorative paints segment despite the early onset of monsoon. The volume growth is driven by the company's cut in prices to maintain competitiveness after Birla Opus' entry in the paints and coating industry, Systematix Shares said. The growth in demand for decorative paints segment is expected to be 4.6% for the June quarter, Prabhudas Lilladher Pvt. Ltd. said.
The company's profit growth is estimated to be under pressure as a result of anti-dumping duty on titanium dioxide, which is widely used in paints and coatings. This will likely offset the benefits of benign crude oil prices which directly or indirectly constitute around 40-50% of input costs, according to Anand Rathi Securities.
The company is expected to report earnings before interest, tax, depreciation, and amortisation of INR 3.16 billion, according to the average of the estimates given by six brokerage firms. The brokerages expect the company to report an EBITDA margin of 14.6%, down 175 basis points on year due to elevated operating costs amid increased competition in the market, according to Kotak Institutional Equities.
Friday, shares of Kansai Nerolac Paints closed at INR 250.05 on the National Stock Exchange, up 2.1%. The stock is down 1.8% since the announcement of its March quarter earnings.
Of the 11 brokerage reports on the company available with Informist, seven have a 'buy' recommendation on the stock at an average target price of INR 307. Three brokerages have a 'sell' recommendation and one brokerage has 'hold' recommendation on the stock.
The company is scheduled to report its earnings Monday.
Following are the Apr-Jun earnings estimates for Kansai Nerolac Paints Ltd. based on reports from seven brokerage firms in the descending order of the estimate of net profit:
Brokerage firm | Net sales (In INR million | Net profit (In INR million) | EBITDA |
Nomura Equity Research | 22,320.00 | 2,430.00 | 3,482.00 |
Prabhudas Lilladher Pvt Ltd | 21,324.00 | 2,390.00 | 3,369.00 |
Anand Rathi Share and Stock Brokers Ltd | 21,119.00 | 2,389.00 | - |
Dolat Capital Market Pvt Ltd | 21,929.00 | 2,247.00 | 3,250.00 |
Kotak Institutional Equities | 21,129.00 | 2,193.00 | 3,079.00 |
HDFC Securities Ltd. | 21,900.00 | 2,100.00 | 3,100.00 |
Systematix Shares and Stocks (India) Ltd | 22,150.00 | 1,891.00 | 2,680.00 |
Average | 21,695.86 | 2,234.29 | 3,160.00 |
End
IST, or Indian Standard Time is five and a half hours ahead of GMT
Edited by Vandana Hingorani
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