Kansai Nerolac Paints held a conference call on 07 February 2025 to discuss the results for the quarter ended December 24 and way forward. Mr. Anuj Jain, Managing Director, Mr. Prashant Pai, Director Finance & CFO and Mr. Jason Gonsalves, Director – Corporate Planning, IT & Materials of the company addressed the call.

Highlights of the Concall

• In Q3 FY25, the holding company sold land and building in Lower Parel, Mumbai to Aethon Developers for Rs 726 crore. The profit of Rs 665 crore has been included as an exceptional item. Additionally, exceptional items also include provisions for impairment in subsidiaries, totaling Rs 36 crore, due to changes in market conditions.

• Demand for decorative was impacted in Q3 FY25 due to higher inflation, leading to lower spends on discretionary products and tight liquidity. Current mix of rural market in decorative business is around 30-35%.

• The company added 20 new products to its decorative paints portfolio in 9MFY25 and contribution from new products was in double digits.

• The company witnessed positive volume growth in decorative paints during the quarter and de-growth in value terms on a YoY basis.

• The company has a distribution network of around 300 Nerolac NextGen Shopee in over 200 towns. Furthermore, they increased their presence in the project business to 80 towns in Q3 FY25. Next Gen Painting service and Architect & Interior Designer contributed around 5% to decorative sales in Q3 FY25.

• The company witnessed a de-growth in putty and distemper category in Q3 and 9MFY25.

• The new business, including construction chemicals and wood finishes contributed around 10% to the decorative sales in the quarter gone by.

• During Q3FY25 Industrial paints value growth on a YoY basis was in high single digits.

• In Q3FY25, company witnessed better growth in automotive sector as compared to the market.

• Performance coating witnessed strong growth driven by strong order pipeline.

• During the quarter, passenger vehicle and 2-wheeler segment witnessed good growth on account of festive season, however, there was a subdued growth in commercial vehicle and tractor segment.

• The company recorded high single digit growth in auto refinish sector with notable win in bodyshop count.

• In the period under review, the company launched new products in industrial paint segment such as Everlast matt clear coat, Special polyurethane (PU) clear, etc.

• The company continues to see good growth in Paint+ products, projects, wood coatings and construction chemicals during the period.

• Kansai has around 35,000-40,000 distributors and the penetration of tinting machine is around 75%.

• The company expects to maintain a margin in the range of 13%-14% in the coming quarters.

• The company mentioned that recent budget announcements will help improve the consumption cycle which would positively impact demand in the near future.

• The management foresees increased cost of imports due to rupee depreciation.

• The company expects tractor segment to show good growth in the coming quarters led by a good monsoon and harvest while performance coating is envisaged to show good traction going forward driven by government’s strong focus on infrastructure spending.