Kansai Nerolac Paints (500165) Q4 20/21 earnings summary

Executive summary

• FY 2020-21 brought a 5.1% standalone revenue decline amid COVID-19 disruption, while cost controls lifted EBITDA margin to 17.8% from 15.8%.

• Demand recovered after the first-quarter shutdown; operating cash flow and free cash flow rose, and capacity investments continued.

Financial highlights

• Standalone revenue was ₹4,690.00 crore, down 5.1% YoY; PBDIT before exceptional item was ₹833.08 crore, up 6.6%.

• Standalone PAT was ₹530.99 crore, down from ₹535.40 crore; EPS was ₹9.85 versus ₹9.94.

• Standalone operating cash flow was ₹638.66 crore versus ₹620.61 crore; free cash flow reached ₹542.10 crore versus ₹403.60 crore.

• Consolidated revenue was ₹5,074.25 crore versus ₹5,279.97 crore; consolidated PAT was ₹525.72 crore versus ₹515.78 crore.

Outlook and guidance

• Demand was expected to remain positive, supported by demographics, nuclear families, infrastructure investment and low paint penetration; outlook was positive over the long term.

• The second COVID-19 wave was expected to create near-term challenges; recovery hinged on vaccine rollout and the economy rebounding.

• High inflation and raw-material price increases remained near-term concerns; pricing actions and the economy’s recovery were identified as critical.

• Renewable-energy targets: 41% of total power needs by FY 2022-23 and 70% of the overall power mix over the long term.