Kansai Nerolac Paints (500165) Q4 17/18 earnings summary

Executive summary

• FY18 standalone net sales and other operating income grew 14.6% YoY; PBDIT rose 8.1%, while PBT increased 3.6% and PAT reached ₹516.40 crore.

• Industrial coatings retained leadership and gained market share despite a challenging H1; auto refinish grew faster than the market.

• Growth investments included three greenfield plants, a new R&D centre, digital capabilities and expansion into allied coating businesses.

Financial highlights

• Standalone revenue from operations was ₹4,737.01 crore vs ₹4,531.05 crore; prior-year sales are not comparable due to GST implementation in July 2017.

• Standalone PBDIT was ₹789.77 crore vs ₹730.69 crore; PBT ₹786.40 crore vs ₹759.42 crore; PAT ₹516.40 crore vs ₹505.94 crore.

• Other income fell to ₹72.42 crore from ₹98.22 crore, reflecting surplus funds used to fund projects and lower interest rates.

• Consolidated revenue from operations was ₹4,808.52 crore vs ₹4,584.53 crore; consolidated PAT was ₹513.75 crore vs ₹510.08 crore.

Outlook and guidance

• Sayakha Phase 1 was completed and was expected to start operations shortly; Amritsar construction was underway, with operations expected during FY19.

• The Vashi global R&D centre was expected to commence operations in FY19; the Visakhapatnam facility remained in planning after land acquisition.

• Real estate demand began recovering in Q4 and was expected to continue; rural income support and infrastructure priorities were cited as growth opportunities.

• Cost increases were being addressed through internal initiatives and customer price increases; crude prices, inflation and raw-material availability remained concerns.