Kansai Nerolac Q2 Review - Focused To Resolve Issues That Led To Underperformance Vs Peers: ICICI Securities

ICICI Securities Report

While Kansai Nerolac Paints Ltd.’s Q2 FY23 was weaker than consensus and our estimates, we note certain positives as-

1. the company has increased its brand building spends. We model the benefits with a lag of two-three quarters,

2. recovery in automotive paints will likely ensure superior revenue growth versus peers and lead to benefits of operating leverage and

3. with expected price hikes from auto original equipment manufacturers, the Ebitda margins have bottomed out, in our view.

Kansai is focusing on resolving issues that led to its underperformance versus peers. It plans to increase share of voice, premiumise the portfolio, defocus some of the low margin products and expand distribution.

While we note Kansai is on right track, we model the restructuring process to impact earnings in near term.

Click on the attachment to read the full report:

DISCLAIMER

This report is authored by an external party. BQ Prime does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of BQ Prime.

Users have no license to copy, modify, or distribute the content without permission of the Original Owner.