- 02 Nov 2022
- ICICIdirect Research
KANSAI REPORTS Q2FY23 PERFORMANCE LOWER THAN OUR ESTIMATES
KANSAINER - 277 Change: -4.35 (-1.55 %)News:
Kansai Nerolac’s net revenue came in at ~Rs 1814 crore up ~19% YoY led by strong demand from automotive segment. Demand for decorative paints was subdued due to extended monsoon. On a three-year basis, revenue grew at CAGR of 13%.The EBITDA margin at ~11% was flat on YoY basis due to higher operating costs led by advertisement & promotional spends. The gross margin remained flat YoY mainly due to price hikes. PAT grew 19% YoY to Rs117.3 crore tracking higher topline growth
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The Q2FY23 performance of Kansai was primarily driven by a robust recovery in its industrial paint segment. Due to the prolonged monsoon, the growth of decorative paint remained muted. Although topline growth in Q2FY23 was strong, its three-year revenue CAGR is still lower than that of the leader in the sector. In addition, Q2FY23 EBITDA margin was lower than the pre-Covid range of 14–15%. This was primarily due to a delay in price increases and an adverse product mix. We await management commentary on decorative paint demand outlook and EBITDA margin recovery from here on
Impact:
Negative