Capitaline

Results 02-Aug-22

Analysis

Kansai Nerolac Paints

Healthy demand from both decorative and Industrial paints

Kansai Nerolac Paints consolidated net sales increased 46.24% to Rs 2051.37 crore in Q1FY23 compared to Q1FY22.

Operating profit margin has declined from 13.58% to 12.43%, leading to 33.87% rise in operating profit to Rs 255.04 crore. Raw material cost as a % of total sales (net of stock adjustments) increased from 59.58% to 64.10%. Purchase of finished goods cost rose from 6.06% to 6.30%. Employee cost decreased from 5.87% to 4.27%. Other expenses fell from 14.84% to 13.03%.

Other income fell 51.41% to Rs 4.83 crore. PBIDT rose 29.64% to Rs 259.87 crore. Provision for interest rose 27.48% to Rs 8.49 crore.

PBDT rose 29.71% to Rs 251.38 crore. Provision for depreciation rose 3.38% to Rs 43.13 crore.

Profit before tax grew 36.93% to Rs 208.25 crore. Share of profit/loss were nil in both the periods. Provision for tax was expense of Rs 56.2 crore, compared to Rs 40.7 crore. Effective tax rate was 26.99% compared to 26.76%.

Minority interest decreased 57.56% to Rs -4.27 crore. Net profit attributable to owners of the company increased 37.01% to Rs 156.32 crore.

Promoters’ stake was 74.99% as of 30 June 2022 compared to 74.99% as of 30 June 2021.

Commenting on the results, Mr. Anuj Jain, Managing Director, Kansai Nerolac Paints Ltd said, “This quarter saw a healthy demand for both decorative and Industrial paints. There has been a revival in demand in industrial led by increased demand in automotive due to the gradual easing of the chip shortages.

While inflationary trend continued, towards the end of the quarter, there has been some softening of input prices for crude-based items which is yet to be reflected in derivatives. Rupee depreciated sharply during the quarter. Company has taken prices increase in decorative and industrial during the quarter and is in continued discussion with OEM customers for further price increase.

The company focused on selling a better product mix. It continued with the aggressive cost control program and judicious management of overheads.

Looking forward, with a forecast of a good monsoon, demand should remain healthy”.

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 436.

Kansai Nerolac Paints : Consolidated Results
Particulars	2206 (03)	2106 (03)	Var.(%)	2203 (12)	2103 (12)	Var.(%)
Net Sales	2,051.37	1,402.76	46	6,369.35	5,074.25	26
OPM (%)	12.4	13.6		10.2	17.0
OP	255.04	190.52	34	649.36	863.28	-25
Other Inc.	4.83	9.94	-51	25.41	38.21	-33
PBIDT	259.87	200.46	30	674.77	901.49	-25
Interest	8.49	6.66	27	28.59	23.74	20
PBDT	251.38	193.80	30	646.18	877.75	-26
Depreciation	43.13	41.72	3	169.77	165.3	3
PBT	208.25	152.08	37	476.41	712.45	-33
Share of Profit/(Loss) from Associates	0	0		0	0
PBT before EO	208.25	152.08	37	476.41	712.45	-33
EO Income	0	0		0	0
PBT after EO	208.25	152.08	37	476.41	712.45	-33
Taxation	56.2	40.7	38	133.26	186.73	-29
PAT	152.05	111.38	37	343.15	525.72	-35
Minority Interest (MI)	-4.27	-2.71	58	-15.71	-4.02	291
Net profit	156.32	114.09	37	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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