Monarch Networth Capital Initiated Coverage on Kansai Nerolac With an 'Accumulate' Rating and a Target Price of ₹232, Valuing the Stock'

The company reported 9.8 per cent year-on-year revenue growth, the highest in the last 12 quarters, driven by high-single-digit growth in decorative and double-digit growth in industrial businesses. In the industrial segment, automotive, performance coating, and powder coating posted robust growth. Despite a 5 per cent consolidated price hike, gross margin and EBITDAM contracted to 35 per cent and 13.8 per cent, respectively, due to an adverse product mix and delayed pricing pass-through in the industrial business.

Management expects margins to improve from Q2FY27E, driven by the full impact of 3 per cent decorative and 3-5 per cent industrial price hikes, while maintaining FY27E EBITDAM guidance of 13-14 per cent and 14 per cent+ over the medium term. Demand is expected to remain healthy despite erratic monsoon and geopolitical uncertainties, though growth lagged market leader Asian Paints (17.6 per cent). Commodity price volatility and macro uncertainties remain key monitorables.