Kansai Nerolac Paints (500165) Q4 18/19 earnings summary

Executive summary

• FY 2018-19 standalone net sales and other operating income rose 12.5% YoY, while PBDIT, PBT and PAT declined amid input-cost inflation and higher depreciation.

• Decorative demand remained strong; near-term industrial growth was expected to be subdued. Capacity additions, a new R&D centre and acquisitions expanded product and market reach.

Financial highlights

• Standalone gross sales and other operating income were ₹5,682.28 crore vs ₹5,197.77 crore; revenue from operations was ₹5,173.62 crore vs ₹4,737.01 crore.

• Standalone PBDIT was ₹742.00 crore, down 6.1% YoY; PBT was ₹713.41 crore, down 9.3%; PAT was ₹467.35 crore vs ₹516.40 crore.

• Consolidated revenue from operations was ₹5,424.32 crore vs ₹4,808.52 crore; consolidated profit was ₹447.66 crore vs ₹513.75 crore.

• Depreciation rose to ₹90.47 crore from ₹75.79 crore, mainly due to Sayakha capitalization; other income fell to ₹61.88 crore from ₹72.42 crore as surplus funds were used for new projects.

Outlook and guidance

• Decorative business was expected to sustain momentum; industrial growth was expected to be subdued in the immediate term, with management hopeful of stronger momentum over the full year.

• A near-normal monsoon, agriculture growth and lower interest rates were expected to support demand.

• The Indian paint market, valued at ₹50,000 crore, was forecast to reach ₹70,000 crore by FY 2021-22; housing and infrastructure were identified as growth supports.