KANSAI NEROLAC PAINTS

Flash News Investment - - RECOMMENDATIONS -

It is one of In­dia’s lead­ing paint com­pa­nies and the largest player in the in­dus­trial seg­ment. Due to ris­ing raw ma­te­rial prices and fluc­tu­a­tion in cur­rency, all com­pa­nies across the paint in­dus­try faced oper­at­ing mar­gins pres­sures. But the com­pany ex­pects re­vival in vol­umes and rev­enue from Q2FY19 with ex­pan­sion in in­dus­trial seg­ment. In Q1FY19, it re­ported ro­bust num­bers led by dou­ble digit growth in the dec­o­ra­tive seg­ment. The com­pany has launched new prod­ucts in the dec­o­ra­tive seg­ment and is fo­cus­ing on for­ay­ing into West and South In­dian mar­kets. Also, it is spend­ing high on ad­ver­tis­ing and mar­ket­ing for pro­mot­ing its dec­o­ra­tive seg­ment. Re­cently, the GST rate on paints was re­duced from 28 per cent to 18 per cent, which would ben­e­fit the com­pany. Con­sid­er­ing the pos­i­tive prospects, we rec­om­mend it as a BUY.

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