Kansai Nerolac Q1 net profit falls 69%, stock jumps 11% as management remains optimistic; check details

The company’s consolidated net profit nosedived 68.7% year over year to ₹230.83 crore in the first quarter of the current financial year, compared to ₹738 crore in the same period last year. This is due to an exceptional item or gain worth ₹661.25 crore witnessed in the June 2023 quarter, thereby providing a higher base for comparison.

Kansai Nerolac Paints’ consolidated revenue from operations remained muted, dropping by a minute 1.1% year-on-year (YoY) in the June 2024 quarter to ₹2,133 crore as against ₹2156.8 crore reported in the year-ago period

However, the paint major’s stock rose over 10% on July 30, 2024, recording the day’s high at ₹314.2 per share on the National Stock Exchange (NSE).

Kansai Nerolac Paints has continued to witness good demand for its Automotive Coatings business, while multiple measures, including cost control, product mix, and procurement efficiencies, have helped the company improve its gross margins over the corresponding quarter last year.

Its net revenue of ₹2,050.4 crore witnessed a degrowth of 1% over the corresponding quarter of the previous year, attributed to a muted demand for decorative paints led by an unprecedented heat wave, labour shortages, and elections. The demand for performance coatings also remained subdued during the quarter under focus.

The leading paint company’s Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) stood at ₹334.4 crore in Q1 FY25, climbing 0.2% year over year, while profit before tax (PBT) grew 6.2% year over year to ₹323.4 crore prior to the exception item.

The paint maker’s managing director, Anuj Jain, has stated that the prices of raw materials have started to harden due to various geopolitical issues and that the company is actively taking steps to mitigate the rise in costs.

As of March 2024, the size of India’s paint industry is pegged to be around ₹75,000 crore. Going ahead, the company expects favorable monsoon demand to improve the demand for decorative paints, while a continued thrust on infrastructure growth, new projects, and an order pipeline is likely to strongly push the demand for performance coatings, too.

Kansai Nerolac Paints shares are trading over 11% higher at ₹312 per piece on the NSE at 1:45 pm on Tuesday.