Capitaline

Results 01-Feb-22

Analysis

Kansai Nerolac Paints

Sales up 14%, OP down 30%

Kansai Nerolac Paints consolidated net sales increased 13.68% to Rs 1810.35 crore in Q3FY22 compared to Q3FY21. Operating profit margin has declined from 19.12% to 11.72%, leading to 30.31% decline in operating profit to Rs 212.17 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 56.27% to 63.08%. Purchase of finished goods cost fell from 6.05% to 6.00%. Employee cost increased from 4.66% to 4.69%. Other expenses rose from 14.37% to 14.61%.

Other income fell 30.40% to Rs 9.96 crore. PBIDT fell 30.31% to Rs 222.13 crore. Provision for interest rose 44.33% to Rs 7.26 crore. PBDT fell 31.51% to Rs 214.87 crore. Provision for depreciation rose 7.59% to Rs 42.95 crore. Profit before tax down 37.21% to Rs 171.92 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 46.6 crore, compared to Rs 69.3 crore. Effective tax rate was 27.11% compared to 25.31%.

Net profit attributable to owners of the company decreased 37.18% to Rs 128.03 crore.

Promoters’ stake was 74.99% as of 31 December 2021 compared to 74.99% as of 31 December 2020.

Commenting on the results, Mr. H. M. Bharuka, Vice Chairman and Managing Director, Kansai Nerolac Paints Ltd said, “The quarter witnessed a good demand for Decorative. In Auto, demand was muted on account of the semi-conductor chips shortages. On raw material costs, the quarter continued to witness inflationary pressures along with volatility in crude and exchange rates. Supply Chain tightness continued during the quarter. Company has not been able to encash the full benefit of demand.

The company effected price increases in Decorative & cumulative price increase so far is more than 20%. Similarly, across all industrial segments an average price increase of around 18% has been implemented. Effect of these increases will be reflected going forward. Material costs continue to rise necessitating further price increase to offset this cost increase. Judicious management of costs and overheads continued.

Looking forward it is expected that the impact of omicron on demand would be limited.

For year-to-date (YTD) results analysis

Net sales of Kansai Nerolac Paints have increased 33.70% to Rs 4832.75 crore.

Operating profit margin has declined from 17.98% to 11.70%, leading to 12.99% decline in operating profit to Rs 565.44 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 54.24% to 63.51%. Purchase of finished goods cost fell from 6.38% to 6.11%. Employee cost decreased from 6.25% to 4.98%. Other expenses fell from 15.15% to 14.05%.

Other income fell 3.30% to Rs 26.38 crore. PBIDT fell 12.60% to Rs 591.82 crore. Provision for interest rose 30.14% to Rs 20.77 crore. PBDT fell 13.63% to Rs 571.05 crore. Provision for depreciation rose 8.19% to Rs 126.73 crore. Profit before tax down 18.33% to Rs 444.32 crore. Provision for tax was expense of Rs 120.34 crore, compared to Rs 141.91 crore. Effective tax rate was 27.08% compared to 26.09%.

Minority interest decreased 202.08% to Rs -10.15 crore. Net profit attributable to owners of the company decreased 17.59% to Rs 334.13 crore.

Promoters’ stake was 74.99% as of 31 December 2021 compared to 74.99% as of 31 December 2020.

FY21 consolidated performance

Net sales of Kansai Nerolac Paints have declined 3.90% to Rs 5074.25 crore. Operating profit margin has jumped from 15.24% to 17.01%, leading to 7.31% rise in operating profit to Rs 863.28 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 55.86% to 56.67%. Purchase of finished goods cost rose from 5.50% to 6.12%. Employee cost decreased from 5.93% to 5.88%. Other expenses fell from 17.33% to 14.67%.

Other income rose 49.67% to Rs 38.21 crore. Provision for interest rose 13.53% to Rs 23.74 crore. Loan funds rose to Rs 262.75 crore as of 31 March 2021 from Rs 237.01 crore as of 31 March 2020. Inventories rose to Rs 1,197.93 crore as of 31 March 2021 from Rs 1,008.35 crore as of 31 March 2020. Sundry debtors were higher at Rs 956.35 crore as of 31 March 2021 compared to Rs 786.98 crore as of 31 March 2020. Cash and bank balance declined from Rs 192.03 crore as of 31 March 2020 to Rs 124.53 crore as of 31 March 2021. Investments rose to Rs 669.01 crore as of 31 March 2021 from Rs 305.95 crore as of 31 March 2020 .

Provision for depreciation rose 16.31% to Rs 165.3 crore. Fixed assets increased to Rs 2,099.26 crore as of 31 March 2021 from Rs 2,055.71 crore as of 31 March 2020. Intangible assets stood at Rs 19.78 crore.

Profit before tax grew 6.82% to Rs 712.45 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 186.73 crore, compared to Rs 151.18 crore. Effective tax rate was 26.21% compared to 22.67%.

Minority interest increased 23.14% to Rs -4.02 crore. Net profit attributable to owners of the company increased 1.68% to Rs 529.74 crore.

Promoters’ stake was 74.99% as of 31 March 2021 compared to 74.99% as of 31 March 2020 .

Cash flow from operating activities increased to Rs 645.87 crore for year ended March 2021 from Rs 595.07 crore for year ended March 2020. Cash flow used in acquiring fixed assets during the year ended March 2021 stood at Rs 103.79 crore, compared to Rs 242.12 crore during the year ended March 2020.

The stock trades at Rs 559.

Kansai Nerolac Paints : Consolidated Results
Particulars	2112 (03)	2012 (03)	Var.(%)	2112 (09)	2012 (09)	Var.(%)	2103 (12)	2003 (12)	Var.(%)
Net Sales	1,810.35	1,592.55	14	4,832.75	3,614.68	34	5,074.25	5,279.97	-4
OPM (%)	11.7	19.1		11.7	18.0		17.0	15.2
OP	212.17	304.44	-30	565.44	649.83	-13	863.28	804.46	7
Other Inc.	9.96	14.31	-30	26.38	27.28	-3	38.21	25.53	50
PBIDT	222.13	318.75	-30	591.82	677.11	-13	901.49	829.99	9
Interest	7.26	5.03	44	20.77	15.96	30	23.74	20.91	14
PBDT	214.87	313.72	-32	571.05	661.15	-14	877.75	809.08	8
Depreciation	42.95	39.92	8	126.73	117.14	8	165.3	142.12	16
PBT	171.92	273.80	-37	444.32	544.01	-18	712.45	666.96	7
Share of Profit/(Loss) from Associates	0	0		0	0		0	0	-
PBT before EO	171.92	273.80	-37	444.32	544.01	-18	712.45	666.96	7
EO Income	0	0		0	0		0	0	-
PBT after EO	171.92	273.80	-37	444.32	544.01	-18	712.45	666.96	7
Taxation	46.6	69.3	-33	120.34	141.91	-15	186.73	151.18	24
PAT	125.32	204.50	-39	323.98	402.10	-19	525.72	515.78	2
Minority Interest (MI)	-2.71	0.71	LP	-10.15	-3.36	202	-4.02	-5.23	23
Net profit	128.03	203.79	-37	334.13	405.46	-18	529.74	521.01	2
EPS (Rs)*	#	#		#	#		9.8	9.7
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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