Kansai Nerolac Paints Ltd

Financial Performance

• Q1 FY27 margins remained stable despite inflation and inventory costs.
• Q1 consolidated pricing was 4–5%.
• Decorative volume growth high-single-digit; industrial volumes double-digit.
• Industrial gross contribution declined about 1.3% due to price pass-through lag.
• Q2: decorative pricing ~3%; industrial ~3–5%.
• Capex outlay INR 600 crore over ~2 years; baseline annual capex INR 150–200 crore.
• Capacity additions: 66,000 KL/year across Sayakha, Bawal, Hosur; resin capacity ~10,000 MT.
• Mid-term margin target 14%+; ROCE target 15%+.
• No backward integration into raw materials planned; sourcing may use Kansai Group.
• Brand awareness >95%; distribution reach 250+ cities.
• AID program in 45+ cities; Pragati covers 65,000 painters.
• New products launched: Excel Everlast 20; Excel Total Floor Coat; Perma NoDamp NXT.
• Campaigns: Out of This World; No Heat campaigns with broad reach.
• Awards won: Golden Peacock Energy Efficiency; ABBY 2026 awards.
• ESG: EcoVadis Bronze; CRISIL ESG Rating top 16/548.

Operating Update

• Decorative strategy is six-pronged, with CRM and distributor management tech.
• Offline retail footprint: 186 NXTGEN Shoppe; 275 Shop-in-Shop; 385 Nerolac Paint+ zones.
• Industrial performance: premiumization, new technologies, dealer expansion; EV focus.
• Automotive tie-up enables water-based, high solids, low bake technologies.
• New segments include boost chemicals and underbody coatings; project pipeline strong.
• Capex 600 crore; capacity expansion and resin capacity improvements.
• Capacity expansion: 66,000 KL/year; resin ~10,000 MT.
• Awards and ESG: manufacturing energy efficiency, ABBY 2026 awards; EcoVadis Bronze.

Q&A Highlights

• Decorative growth in line with market; premium mix prioritized.
• Margins: industrial pass-through lag; margins to be maintained.
• Capex 600 crore over ~2 years; annual capex not materially impacted.
• Backward integration not planned; sourcing within Kansai Group.
• ROCE target 15%+; mid-term margin 14%+.
• Q2 pricing: deco +3%; industrial +3–5%; Q1 4–5%.
• Dealer productivity up with premium mix; no fixed timeline.
• Industrial utilization high; expansion to meet demand over two years.

Guidance and Outlook

• FY27 margins to be maintained; premiumization focus.
• Mid-term margin target 14%+; ROCE 15%+.
• Capex INR 600 crore over ~2 years; baseline annual capex 150–200 crore.
• Pricing trajectory: deco +3%; industrial +3–5% in Q2.
• Backward integration not planned; sourcing within Kansai Group as needed.

Risks and Watchpoints

• Competitive intensity remains high; pricing discipline crucial.
• Inflation and currency fluctuations; pass-through lag risk.
• Macro headwinds including monsoon and geopolitical factors.
• Execution risk around capex and capacity commissioning.

Filing Status

• Transcript-based filing; substantive content present.

Meeting Details

• Date and time: 3 August 2026 at 17:00 India Time.
• Type and mode: group call conducted virtually.
• Event/organiser: Q1 FY27 Earnings Conference Call hosted by ICICI Securities Limited.
• Recording: conference call was recorded; transcript available.

Participants

• Managing Director - Kansai Nerolac Paints Limited participated.
• Chief Financial Officer participated.
• Director - Corporate Planning, IT and Materials participated.

Purpose

• Purpose: discuss Q1 FY27 financial results.
• Format: investor conference call with Q&A session.

Additional Notes

• Transcript of the conference call is enclosed; no URLs provided.

Capital / Securities

• Board approves allotment of 64,309 equity shares under RSU Plan 2022.
• Date of issue: 23 July 2026; total issued shares now 80,87,78,779.

AGM details

• Date and mode: 9 July 2026, VC/OAVM.
• Start time: 11:00 to 1:40 p.m. IST.
• Quorum present; record date: 2 July 2026.
• Shareholders on record: 149,460.

Resolutions and outcomes

• Adoption of audited financial statements approved.
• Dividend of Rs 2.50 per share approved.
• Re-appointment of Takashi Tomioka as Director approved.
• Cost auditor remuneration for FY2027 ratified.