Capitaline

Results 03-Feb-23

Analysis

Kansai Nerolac Paints

Sales up 1%, OP down 8%

Kansai Nerolac Paints consolidated net sales increased 0.91% to Rs 1826.81 crore in Q3FY23 compared to Q3FY22. Operating profit margin has declined from 11.72% to 10.70%, leading to 7.87% decline in operating profit to Rs 195.48 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 63.08% to 63.47%. Purchase of finished goods cost rose from 6.00% to 6.05%. Employee cost increased from 4.69% to 5.15%. Other expenses fell from 14.61% to 14.60%.

Other income fell 25.90% to Rs 7.38 crore. PBIDT fell 8.68% to Rs 202.86 crore. Provision for interest rose 2.07% to Rs 7.41 crore.

PBDT fell 9.04% to Rs 195.45 crore. Provision for depreciation rose 7.10% to Rs 46 crore.

Profit before tax down 13.07% to Rs 149.45 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 40.48 crore, compared to Rs 46.6 crore. Effective tax rate was 27.09% compared to 27.11%.

Minority interest increased 64.94% to Rs -0.95 crore. Net profit attributable to owners of the company decreased 14.15% to Rs 109.92 crore.

Promoters’ stake was 74.99% as of 31 December 2022 ,compared to 74.99% as of 31 December 2021. .

Commenting on the results, Mr. Anuj Jain, Managing Director, Kansai Nerolac Paints Ltd said,

“The quarter witnessed good demand in Automotive coatings. Demand in Decorative was impacted on account of early Diwali, extended monsoons and higher than normal channel stocking due to price increases during Oct 21 & Nov21.

Raw material prices showed a decline during the quarter. The quarter continued to witness high exchange volatility with the rupee sharply depreciating further. The company was able to conclude the price increases with all its key OEMs during the quarter which will help partly offset the high inflation witnessed over the last two years.

The company initiated various measures to increase growth in decorative. The measures include increase in feet on street, digital interventions, network expansion, new product launches and brand strengthening. Judicious management of costs and overheads continued. Looking forward it is expected that demand would remain healthy in the short to medium term”.

For year-to-date (YTD) results analysis

Net sales (including other operating income) of Kansai Nerolac Paints has increased 20.20% to Rs 5809.14 crore.

Operating profit margin has declined from 11.70% to 11.19%, leading to 14.93% rise in operating profit to Rs 649.87 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 63.51% to 64.51%. Purchase of finished goods cost rose from 6.11% to 6.17%. Employee cost decreased from 4.98% to 4.69%. Other expenses fell from 14.05% to 13.58%.

Other income fell 38.29% to Rs 16.28 crore. PBIDT rose 12.56% to Rs 666.15 crore. Provision for interest rose 6.88% to Rs 22.2 crore.

PBDT rose 12.77% to Rs 643.95 crore. Provision for depreciation rose 5.95% to Rs 134.27 crore.

Profit before tax grew 14.71% to Rs 509.68 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 137.45 crore, compared to Rs 120.34 crore. Effective tax rate was 26.97% compared to 27.08%.

Minority interest increased 25.32% to Rs -7.58 crore. Net profit attributable to owners of the company increased 13.67% to Rs 379.81 crore.

Promoters’ stake was 74.99% as of 31 December 2022 ,compared to 74.99% as of 31 December 2021.

Full year results analysis

Net sales of Kansai Nerolac Paints have increased 25.52% to Rs 6369.35 crore. Operating profit margin has declined from 17.01% to 10.20%, leading to 24.78% decline in operating profit to Rs 649.36 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 56.67% to 64.82%. Purchase of finished goods cost fell from 6.12% to 6.03%. Employee cost decreased from 5.88% to 5.34%. Other expenses fell from 14.67% to 14.07%.

Other income fell 33.50% to Rs 25.41 crore. PBIDT fell 25.15% to Rs 674.77 crore. Provision for interest rose 20.43% to Rs 28.59 crore. Loan funds rose to Rs 318.71 crore as of 31 March 2022 from Rs 269.00 crore as of 31 March 2021. Inventories rose to Rs 1,629.55 crore as of 31 March 2022 from Rs 1,197.93 crore as of 31 March 2021. Sundry debtors were higher at Rs 1,093.33 crore as of 31 March 2022 compared to Rs 956.35 crore as of 31 March 2021. Cash and bank balance declined from Rs 124.53 crore as of 31 March 2021 to Rs 106.00 crore as of 31 March 2022. Investments declined from Rs 669.01 crore as of 31 March 2021 to Rs 210.54 crore as of 31 March 2022.

PBDT fell 26.38% to Rs 646.18 crore. Provision for depreciation rose 2.70% to Rs 169.77 crore. Fixed assets increased to Rs 2,200.96 crore as of 31 March 2022 from Rs 2,099.26 crore as of 31 March 2021. Intangible assets stood at Rs 19.78 crore.

Profit before tax down 33.13% to Rs 476.41 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 133.26 crore, compared to Rs 186.73 crore. Effective tax rate was 27.97% compared to 26.21%.

Minority interest decreased 290.80% to Rs -15.71 crore. Net profit attributable to owners of the company decreased 32.26% to Rs 358.86 crore.

Equity capital stood at Rs 53.89 crore as of 31 March 2022 to Rs 53.89 crore as of 31 March 2021. Per share face Value remained same at Rs 1.00.

Promoters’ stake was 74.99% as of 31 March 2022 compared to 74.99% as of 31 March 2021 .

Cash flow from operating activities decreased to Rs 24.77 crore for year ended March 2022 from Rs 645.87 crore for year ended March 2021. Cash flow used in acquiring fixed assets during the year ended March 2022 stood at Rs 219.01 crore, compared to Rs 103.79 crore during the year ended March 2021.

The stock trades at Rs 419.

Kansai Nerolac Paints : Consolidated Results
Particulars	2212 (03)	2112 (03)	Var.(%)	2212 (09)	2112 (09)	Var.(%)	2203 (12)	2103 (12)	Var.(%)
Net Sales	1,826.81	1,810.35	1	5,809.14	4,832.75	20	6,369.35	5,074.25	26
OPM (%)	10.7	11.7		11.2	11.7		10.2	17.0
OP	195.48	212.17	-8	649.87	565.44	15	649.36	863.28	-25
Other Inc.	7.38	9.96	-26	16.28	26.38	-38	25.41	38.21	-33
PBIDT	202.86	222.13	-9	666.15	591.82	13	674.77	901.49	-25
Interest	7.41	7.26	2	22.2	20.77	7	28.59	23.74	20
PBDT	195.45	214.87	-9	643.95	571.05	13	646.18	877.75	-26
Depreciation	46	42.95	7	134.27	126.73	6	169.77	165.3	3
PBT	149.45	171.92	-13	509.68	444.32	15	476.41	712.45	-33
Share of Profit/(Loss) from Associates	0	0		0	0		0	0
PBT before EO	149.45	171.92	-13	509.68	444.32	15	476.41	712.45	-33
EO Income	0	0		0	0		0	0
PBT after EO	149.45	171.92	-13	509.68	444.32	15	476.41	712.45	-33
Taxation	40.48	46.6	-13	137.45	120.34	14	133.26	186.73	-29
PAT	108.97	125.32	-13	372.23	323.98	15	343.15	525.72	-35
Minority Interest (MI)	-0.95	-2.71	-65	-7.58	-10.15	-25	-15.71	-4.02	291
Net profit	109.92	128.03	-14	379.81	334.13	14	358.86	529.74	-32
EPS (Rs)*	#	#		#	#		6.7	9.8
Notes
* EPS is on current equity of Rs 53.89 crore, Face value of Rs 1, Excluding extraordinary items.
# EPS is not annualised
bps : Basis points
Figures in Rs crore
Source: Capitaline Corporate Database

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