Kansai Nerolac's Q3 net profit aided by lower taxes; stock slips 3.5%

Kansai Nerolac Paints Limited (KNPL), one of the leading Paint companies in India, today at the Board meeting announced its unaudited results for the third quarter of financial year 2019-20. For the quarter, the company declared Net revenue of Rs1,248.1cr, a de-growth of 7.6% over the corresponding quarter of the previous year. For the nine months ending December 31, 2019, the company had a Net revenue of Rs3,955.1cr a de-growth of 1.6% over the corresponding period of the previous year.

The stock is trading lower by 3.52% post the result announcement.

EBIDTA was at Rs191.9cr, a growth of 8.4% over the same quarter of the previous year. Lower Tax has resulted in Net profit growth of 8.8%. For the nine months ending December 31, 2019, company reported an EBITDA of Rs653.8cr, a growth of 10.4% over the same period last year. Net profit growth was up by 23.9%.

Commenting on the results, Mr. H. M. Bharuka, Vice Chairman and Managing Director, Kansai Nerolac Paints Ltd said, "Both Decorative and Industrial business have seen a dip in demand in the current quarter. Within Industrial, in Automotive, where the company has a significant exposure, the impact continues to be very severe due to the continued unprecedented slowdown. The company's decorative sales were impacted due to lower offtake during the festival season and extended monsoons.

During the quarter, input costs were stable. This along with judicious control on costs has helped improve the EBITDA margin by 230 basis points. Exchange rate and crude oil prices continued to show volatility creating challenges in raw material cost management. Looking forward, the demand in Decorative business would be positive but expected to be muted. Challenges of demand in Industrial are expected to continue for the near future."

Stock view:

Kansai Nerolac Paints Ltd is currently trading at Rs493.60 down by Rs17.85 or 3.49% from its previous closing of Rs511.45 on the BSE.

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