Kansai Nerolac Paints (500165) Q2 25/26 earnings summary

Executive summary

• Net revenue for Q2 FY25-26 grew 0.4% year-over-year; H1 revenue up 1.1%, with profitability under pressure from higher costs.

• Decorative segment saw slightly negative value and volume growth overall, but double-digit growth in projects, construction chemicals, waterproofing, and premium wood finishes.

• Industrial segment posted lower single-digit growth, with automotive and performance coatings showing resilience and strong demand in premium auto refinish.

• Over 2,500 dealers added in H1, with strong expansion in new retail formats and project business.

• Innovation and premiumization remain key, with new product launches contributing 10-12% of H1 revenue.

Financial highlights

• Standalone Q2 net revenue was ₹1,871.02 crore (+0.4% YoY), consolidated Q2 revenue ₹1,954.18 crore (+0.1% YoY); H1 standalone revenue ₹3,958.44 crore (+1.1% YoY).

• Q2 EBITDA declined 1.5% YoY to ₹211.85 crore; PBT fell 4% to ₹184.39 crore; H1 EBITDA down 4.7%, PBT down 4.1%.

• Standalone Q2 PAT was ₹136.94 crore (7.3% margin); consolidated Q2 PAT ₹133.31 crore (6.8% margin).

• Gross margin improved due to lower crude prices, partially offset by rupee depreciation.

• Other income declined sequentially due to lower interest rates and dividend payout.

Outlook and guidance

• Construction activity and infrastructure growth expected to sustain demand, especially for high-end coatings.

• Automotive demand likely to benefit from GST rate cuts and policy measures.

• Gradual recovery anticipated in Decorative segment as monsoon impact subsides; margin guidance maintained at 13-14% short term, aspiring to 15% long term.

• Consumption demand expected to pick up in H2, supported by tax relief and employment measures.