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Informist, Monday, Aug. 3, 2026

 

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--Kansai Nerolac:Gained mkt share in new segments of alloy wheel, seam sealer
--CONTEXT: Comments by Kansai Nerolac Paints' mgmt in earnings investor call
--Kansai Nerolac: Capex outlay of INR 6 billion for capacity expansion
--Kansai Nerolac: Consumer sentiment may get impacted due to inflation
--Kansai Nerolac: Competitive intensity in decorative paints to stay for FY27
--Kansai Nerolac:Aiming for 5-10% network addition per yr in decorative paint
--Kansai Nerolac: Decorative paints revenue growth high single digit Q1
--Kansai Nerolac: Capex outlay of INR 6 billion to be spread over 2 years
--Kansai Nerolac:Took 5% price hike in contracts with industrial customers Q1
--Kansai Nerolac:Availability, reach, conversion top priority for decoratives
--Kansai Nerolac: About 5% pricing growth in Apr-Jun at consolidated level
--Kansai Nerolac: Decorative paints volume growth in low single digit Q1
--Kansai Nerolac: Cost inflation in industrial solvents humongous in Q1

 

By Rajesh Gajra and Diksha Tripathy

 

MUMBAI - The rise in pricing of its products on a consolidated level was about 5% for the June quarter, the management of Kansai Nerolac Paints Ltd. said in a post-earnings conference call with analysts and investors Monday. A senior official said that in the industrial paints segment, it is difficult to put a number to the price hike because the pricing takes place through customer-level contracts.

 

After negotiations and extracting the most leverage possible, the company was able to ask for a price hike of about 5% from its industrial customers, the senior official said. "The other thing to note is also when we ask for price increase, it is always with effective date," the official said, indicating that some of the price hikes sought in the June quarter would become effective in the September quarter.

 

The official said the decorative paints segment "did fairly well" in terms of price hikes and it was the industrial segment "which is lagging". The revenue growth in the decorative paints segment was in the high single digit in the June quarter, the official said. "We cautiously planned for it" through a focus on pushing super-premium and premium products over economy products, he said.

 

Kansai Nerolac's revenue from operations for the June quarter increased 10% on year to INR 23 billion. The volume growth in the decorative paints segment was a "lower single digit", the management said, indicating a growth rate of 1-3%. This was lower than the industry growth because the company sacrificed some volumes by over-indexing on the premium market, a senior official said. The company is "not participating greatly into low-margin, high-volume items", he said.

 

In value terms, the economy products in decorative paints "grew maybe a single digit, whereas super premium grew double digit," the official said. In the September quarter, the company expects the benefit of June quarter price increases to flow through in both the decorative and industrial segments.

 

In line with its strategy of pushing premium and super-premium products, the expenditure in selling, advertisement, and promotions will be more in digital, and ensuring availability, distribution reach, and getting conversion, the management said. These areas were priorities for which the company was investing in the market "rather than just being on the television and trying to sprinkle everything everywhere", a senior official said. The official added that awareness of the Nerolac brand is very high, at more than 95% in the market.

 

Alluding to the increased competition from Grasim Industries Ltd.'s Birla Opus paints products over the past two years, the management said that while the competition has reached an equilibrium state, the level of competitive intensity will be high in the financial year 2026-27 (Apr-Mar). The company is targeting a dealer network addition of 5-10% every year to be competitive in the new landscape.

 

In the industrial segment, Kansai Nerolac's access to the latest global technology has helped it to innovate and create new technologies such as "water-based high solids and low-bake technologies and introducing paints with superior and unique properties," a senior official said. In new segments in the automotive business, the company has gained market share in seam sealer and underbody black products, alloy wheels, and pre-treatment and booth chemicals, he said.

 

Going forward, the company expects to maintain margins though the challenges of cost inflation will remain for some time. In the June quarter, "the kind of (cost) inflation we saw in (industrial) solvents" was "humongous", a senior official said. The company did not get a price increase the next day, yet it was able to maintain its margins, he said. The company's endeavour is to maintain a 13-14% margin for FY27.

 

The management expects automotive demand to be buoyant driven by inventory build-up for the festive period and new launches. But it cautioned that "consumer sentiment may get impacted due to inflationary environment".

 

The company has planned for a total capital expenditure of INR 6 billion to be incurred over two and a half years. It is aimed at expanding its capacity in automotive, powder coating, and resin products at its Sayakha factory and automotive products in the Bawal and Hosur factories, according to the management. It will take the total capacity in paint and powder products up by 65,880 kilolitres per annum and in resin products by 9,780 kilolitres per annum.

 

The net profit of Kansai Nerolac Paints for the June quarter increased 5% on year to INR 2.42 billion. Monday, its shares ended at INR 204.18 on the National Stock Exchange, up 3.8% from Friday.  End

 

Edited by Rajeev Pai

 

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