Kansai Nerolac Q1 FY27 Results (NSE: KANSAINER)
Signal: Steady quarter
The read
Q1FY27 showed healthy revenue growth of 9.8% YoY, driven by strong demand in both decorative and industrial segments, with automotive outperforming the market. However, gross margin contracted 112bps YoY due to a sharp increase in raw material costs (up 112bps as % of revenue) and rupee depreciation, which price increases only partially offset. EBITDA margin fell 30bps YoY to 16.1%, and PAT growth (7.4%) trailed revenue. Management remains cautiously optimistic about demand but highlighted ongoing geopolitical risks, supply chain disruptions, and erratic monsoon. The sequential improvement in margins (QoQ) is seasonal and not indicative of a trend change.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹2,373.59 Cr | 9.8% | 21.5% |
| EBIT | ₹320.48 Cr | 5.8% | |
| Net profit | ₹231.58 Cr | 7.4% | |
| EPS | ₹2.86 | 4.8% | |
| EBIT margin | 16.1% |
P&L walk
Revenue growth driven by healthy demand in decorative and industrial segments, but input cost inflation compressed gross margin; EBITDA margin declined YoY but improved sequentially.
Key positives
- Consolidated revenue grew 9.8% YoY to ₹2,373.59 Cr, accelerating from 7.5% in Q4FY26.
- Automotive coatings grew faster than the market; performance coatings registered strong growth.
- Price increases implemented to partially offset raw material cost inflation.
- EBITDA margin improved sequentially from 12.6% to 16.1% (QoQ).
- Low debt-to-equity ratio (0.05) and healthy interest coverage.
Key concerns
- Gross margin contracted 112bps YoY due to raw material inflation and rupee depreciation.
- EBITDA growth (7.7%) lagged revenue growth (9.8%); operating leverage absent.
- Net profit growth (7.4%) below revenue growth, and EPS growth (4.8%) further diluted.
- Management cautious on geopolitical risks, supply chain disruptions, and monsoon impact.
- Raw material cost as % of revenue increased from 63.93% to 65.05% YoY.
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