Kansai Nerolac Paints (500165) Q3 24/25 earnings summary

Executive summary

• Q3 FY25 delivered stable revenue growth, with top line up 1.5% and strong PAT growth driven by an exceptional gain from a Mumbai land sale, despite impairment provisions in overseas subsidiaries and market challenges.

• Strategic focus on premiumization, new product launches, and expansion in Decorative, Industrial, and Construction Chemical segments supported performance.

• Automotive and performance coatings segments saw robust demand, especially in passenger vehicles, electric vehicles, and high-performance coatings.

• Recognized for ESG leadership, ranking in the top 8% globally in chemicals and winning the Golden Peacock Award for CSR.

• Leadership transition announced, with Praveen Chaudhari to become Managing Director from April 1, 2025.

Financial highlights

• Standalone Q3 net revenue grew 1.5% year-over-year to ₹1,842.16 crore; consolidated revenue up 0.2% to ₹1,921.89 crore.

• Standalone EBITDA up 2.9%; PAT before exceptional items up 7.2%; PAT after exceptional items surged due to a ₹665.44 crore land sale gain.

• Consolidated PAT up 335% year-over-year, driven by one-time gains; YTD consolidated net revenue slightly declined by 0.4%.

• Decorative segment saw marginally positive volume growth but low single-digit value degrowth; Industrial segment posted high single-digit value growth.

• No outstanding loans, debt securities, or defaults as of 31 December 2024.

Outlook and guidance

• Management maintains margin guidance of 13%-14%, with potential for improvement but remains cautious due to competitive pressures.

• Rural demand and public infrastructure capex expected to drive growth; automotive and performance coatings segments anticipated to remain strong.

• Expects gradual demand recovery, supported by government actions and industry trends, but refrains from forecasting high single-digit revenue growth until clearer trends emerge.

• Industry growth for Decorative paints expected to be high single-digit over the next five years, driven by increased penetration and formalization.