BENGALURU (Reuters) – Indian paintmaker Kansai Nerolac reported a rise in second-quarter profit on Wednesday as a drop in raw material costs more than made up for slowing revenue growth.
The company, owned by Japan’s Kansai Paint Co, said its consolidated net profit rose 56% to 1.77 billion rupees ($21.26 million) for the three months ended Sept. 30.
Revenue from operations rose 1.3% to 19.57 billion rupees, while the cost of raw materials fell more than 8%.
For further results highlights, click [FWN3C2228]
WHY IT MATTERS
Overall, the sector has been on the road to recovery, led largely by easing crude prices – a key raw material for paintmakers, comprising about 30% of their input costs.
Kansai Nerolac’s profit rose in the last two quarters on robust demand for its decorative paints after a tough October-December quarter last year, when an extended monsoon hurt quarterly profit.
Peer Asian Paints also reported easing margins and a 54% rise in net profit in the September quarter, even though it missed estimates.
Valuation (next 12 months) Estimates (next 12 Analysts’ sentiment
RIC PE EV/EBIT Price/Sal Revenue Profit Mean # of Stock to Div
DA es growth growth rating* analysts price yield
Kansai Nerolac KANE.N 32.78 21.09 NULL 10.98 21.81 Buy 12 0.91 0.57
Paints Ltd S
Asian Paints Ltd ASPN.N 51.10 34.63 NULL 10.49 15.22 Hold 34 0.92 0.89
Berger Paints India BRGR.N 47.52 30.13 NULL 11.35 22.10 Sell 19 0.99 0.50
Indigo Paints Ltd INDG.N 38.85 24.31 NULL 19.93 15.81 Hold 7 0.85 0.25
* Mean of analysts’ ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell ** Ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY-SEPT STOCK PERFORMANCE
— All data from LSEG
— $1 = 83.2720 rupees
(Reporting by Anuran Sadhu in Bengaluru; Editing by Sohini Goswami)