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KANSAI NEROLAC PAINTS LTD. - 500165 - Board Meeting Intimation for To Inter Alia Consider The Unaudited Standalone And Consolidated Financial Results Of The Company For The Quarter And Six Months Ending September 30, 2021

 KANSAI NEROLAC PAINTS LTD.has informed BSE that the meeting of the Board of Directors of the Company is scheduled on 25/10/2021 ,inter alia, to consider and approve In terms of the provisions of Regulation 29 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, please be informed that the meeting of the Board of Directors of Kansai Nerolac Paints Limited will be held on Monday, October 25, 2021, to inter alia consider the Unaudited Standalone and Consolidated Financial Results of the Company for the quarter and six months ending September 30, 2021 .
30-09-2021

Is Kansai Nerolac adapting to the changing dynamics of the paint industry?

 The paints industry in India is estimated to be around Rs 55,000 crore, and is rapidly growing with new players giving well entrenched ones some heartburn. The entry of JSW Paints in FY19 and the announcement in January 2021 by the Aditya Birla Group of its foray into paints has shaken up the sector. The new entrants pose a challenge to companies who have been in this business for decades. Kansai Nerolac is a 100-year old paint company and is the third largest paints company in terms of market share. Is it up for the challenge by newer entrants, and will it hold on to its share in a crowded market? Kansai Nerolac earns 45% of its revenues from industrial paints (automotive paints, industrial piping coatings, structural steel, steel rebars, etc) and the rest from decorative paints (interior and exterior paints for homes, offices, bungalows, etc). Within the industrial segment, about 27% of its revenues come from automotive paints. A lack of demand in the auto sector directly impacts the company’s revenues. Within the decorative paints segment, the company recently started focusing on premium products in paints and new products in construction chemicals and wood finishes, whose contribution is reflected in the results of Q1FY22. Over the past one year, the stock of Kansai Nerolac rallied 30% and touched an all time high of Rs 667 in January 2021. Quick Takes Demand was impacted towards end of April and May due to lockdowns but recovered in June But demand for decorative paints was better in urban towns as compared to rural markets Rise in crude oil prices coupled with forex volatility continued to be a major challenge in Q1FY22 New product launches across segments like premium paints, construction chemicals and premium wood finishes contributed 10% of sales in Q1FY22 Second wave of Covid-19 slows down demand recovery Comparing the revenues and net profits on a YoY basis, the revenues have doubled, and the net profits tripled in Q1FY22. Last year, Q1FY21 saw the first wave of Covid-19 and a complete lockdown for half of the quarter, while in Q1FY22 we witnessed the second wave with either complete or partial lockdowns in different states. There was a partial recovery in demand and the company sold products through limited depots which were open and most dealerships working only for limited hours. According to the company, continuing the trend of earlier quarters, raw material prices further hardened resulting in extremely high inflation in input prices, coupled with tightness in supplies. “Forex markets continued to be volatile. The company has partly increased prices in Decorative (paints). In Industrial too, the company has increased prices and is making sustained efforts to obtain price increases to offset the impact of inflation," said Kansai Nerolac management. Another area of concern is the falling EBITDA over the past two quarters. A couple of factors are at play here. One is the basic raw material crude oil, the price of which was rising every quarter in FY21. In the decorative segment, the company did not hike prices in Q4FY21 as they were more concerned about sales rather than protecting margins. In Q1FY22, the company hiked prices to pass on the increasing raw material costs. In the industrial segment, the company is negotiating with customers for price hikes and has been successful with some of them. Within the auto paints segment, there was a semiconductor chip shortage with auto manufacturers delaying the production process. This directly impacted Kansai Nerolac as demand in this segment slowed down. Diversification into construction chemicals later than competitors The company forayed into construction chemicals much later than its competitors in the paint sector. It entered into construction chemicals in FY20 but due to the pandemic could not introduce the complete range of products until Q4FY21. According to the management, onboarding distributors for these products is expected to be complete in Q2FY22. The company acquired ‘Perma Construction’ in December 2018 with an objective of catering to the top end of construction chemicals i.e. water-proofing compounds, adhesives, epoxy and admixtures. The management is optimistic about these products but expects it would take a couple of years to build brand presence and substantial market share. Though a late entrant into construction chemicals and wood finishes, the revenue contribution of this segment and new products in the premium paints category is around 10% in Q1FY22. How the company grows the construction chemicals and wood finishes segments will make a visible difference to the top line in coming quarters. Looking at the landscape of the paint industry, the top 4 players control almost 70% of the total market. JSW Paints setting aggressive targets, the heat is on Berger Paints and Kansai Nerolac to maintain their respective market share. Although Kansai Nerolac is the leader in the industrial paints segment, the margins on these products are lesser than those on decorative paints. Till now Kansai Nerolac has focused more on the urban markets with economy ranges of paints and mass markets with its brands like Soldier, specifically targeting tier-3 and tier-4 towns. The company recently introduced some products in the premium category of decorative paints which can help defend its market share. Looking at past stock market returns, the top two players, Asian Paints and Berger Paints have far outperformed Kansai Nerolac over the last one year as well as over the past three years. How these perform over the next few quarters with changing dynamics at play would be something to watch out for. Asian Paints, despite being the leader, has refrained from hiking prices in Q1FY22, in anticipation of predatory pricing by newer entrants. Right now Kansai Nerolac is in catch up mode to maintain its place in the industry. In the last two years, Kansai Nerolac has increased its total paint manufacturing capacity by 28% to 5.3 lakh tonnes, with an investment of about Rs 1100 crore. Though a late entrant into construction chemicals and wood finishes, diversification would add to its competitive advantage. The company is in a position where it faces pressure from the market leader that is fiercely defending its market share on one side, and aggressive new entrants on the other. Historically Kansai Nerolac spent much higher on advertising as compared to its peers. The ad spends are 4.2% of sales by Asian Paints, 3.3% of sales by Berger Paints and 5.1% of sales by Kansai Nerolac. The company expects to reduce this in coming quarters to optimise costs. The company worked on improving the inventory at dealer level by increasing the number of tinting machines. These machines make it possible to have any shade available at the dealer itself. A revival in demand as well as pent up demand, both in rural and urban markets, pick up in the auto sector and growth of premium products can help Kansai Nerolac be better prepared to defend its market share in FY22.
17-08-2021

Buy Kansai Nerolac Paints; target of Rs 750: ICICI Direct

 ICICI Direct is bullish on Kansai Nerolac Paints has recommended buy rating on the stock with a target price of Rs 750 in its research report dated August 03, 2021.
05-08-2021
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KANSAI NEROLAC PAINTS LTD. - 500165 - Announcement under Regulation 30 (LODR)-Analyst / Investor Meet - Outcome

 This refers to the intimation done by the Company on July 30, 2021 with regard to the conference call to be hosted by the Management of our Company to discuss Q1 FY 2021-22 Financial Results of the Company, and intimation done on July 31, 2021, an Investor Presentation was enclosed for the same. The Conference call was hosted by the Management of our Company on Monday, August 2, 2021 at 11 a.m. (IST) and we are enclosing herewith the transcript of the Conference call for your information and reference.
04-08-2021

Earnings Call for Q1FY22 of Kansai Nerolac Paints

 Conference Call with Kansai Nerolac Paints Management and Analysts on Q1FY22 Performance and Outlook. Listen to the full earnings transcript.
02-08-2021

Despite signs of revival, outlook is dull for Kansai Nerolac stock

 Demand for decorative paints was reviving, but demand for industrial paints continued to be impacted by covid-led restrictions, Kansai Nerolac said
02-08-2021
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KANSAI NEROLAC PAINTS LTD. - 500165 - Announcement under Regulation 30 (LODR)-Analyst / Investor Meet - Intimation

 Further to the intimation done by the Company on July 30, 2021, with respect to the conference call to be hosted by the Management of our Company on Monday, August 2, 2021 at 11 a.m. (IST) to discuss Q1 FY 2021-22 Financial Results of the Company, we are enclosing herewith an Investor Presentation.
31-07-2021

Kansai Nerolac Paints Q1 net rises over two-folds to Rs 111.38 crore

 Shares of Kansai Nerolac Paints Ltd on July 30 settled at Rs 626.10 on the BSE, up 1.11 percent from the previous close.
31-07-2021
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Kansai Nerolac Paints Ltd - 500165 - Announcement under Regulation 30 (LODR)-Analyst / Investor Meet - Intimation

 Pursuant to Regulation 30(6) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, we hereby inform you that the Management of our Company will be hosting a conference call on Monday, August 2, 2021 at 11 a.m. (IST) to discuss Q1 FY 2021-22 Financial Results of the Company. We are enclosing herewith the invitation to the conference call for reference.
30-07-2021
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Kansai Nerolac Paints Ltd - 500165 - Announcement under Regulation 30 (LODR)-Press Release / Media Release

 A press release on the Unaudited Financial Results is enclosed herewith.
30-07-2021
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