Kansai Nerolac Paints (KNPL IN) – Q4FY26 Result Update – Steady demand, frequent price hikes a concern – Accumulate
Published on 06 May 2026
We increase our FY27/FY28 EPS estimates by 2.3%/4.2% led by 1) high single digit overall price increase led by price hike of low teen in decorative segment. 2) Healthy demand outlook for auto with continued recovery in decorative segment and 3) Sustained EBITDA margin guidance of 13-14% despite macro headwinds.
However, we believe that frequent price hikes would have built up trade inventory, it has the potential to choke trade if there is meaningful decline in crude prices. We expect healthy volume growth in auto paints (30% of total sales) till 2Q27 due to carry over impact of GST rate cuts, unless we witness sharp increase in cost of ownership due to higher petrol/diesel prices.
We expect 7.3% volume CAGR growth and ~50bps margin expansion over FY26-28. We estimate a CAGR of 8.6% in sales and 10% EPS CAGR over FY26-28. We value the stock at 25xMar28 EPS and assign a target price of Rs248 (Rs234 earlier). While stock offers reasonable upside in near term, long term cautious view decorative Paints sustains. Retain Accumulate.
