Add Kansai Nerolac, target price Rs 500: HDFC Securities

Kansai Nerolac Paints Ltd., incorporated in the year 1920, is a Large Cap company (having a market cap of Rs 26213.06 Crore) operating in Building Materials sector.

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Promoters held 74.99 per cent stake in the company as of June 30, 2020, while FIIs held 4.37 per cent, DIIs 7.77 and public and others 13.26 per cent
HDFC Securities has given a add rating to Kansai Nerolac with a target price of Rs 500. The share price moved up by 1.21 per cent from its previous close of Rs 489.10. The stock’s last traded price is Rs 495.
Kansai Nerolac Paints Ltd., incorporated in the year 1920, is a Large Cap company (having a market cap of Rs 26213.06 Crore) operating in Building Materials sector.

Financials
For the quarter ended 30-06-2020, the company reported a Consolidated sales of Rs 631.37 Crore, down 41.14 % from last quarter Sales of Rs 1072.72 Crore and down 58.82 % from last year same quarter Sales of Rs 1533.30 Crore Company has reported net profit after tax of Rs 29.64 Crore in latest quarter.
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Investment Rationale
Higher industrial salience (lower GMs, higher capital intensity) warrants a valuation discount to Top 2. That said, increasing decorative salience will help RoICs improve from 10.8% to 14.5% over FY21-23. Swifter Auto recovery could offer higher upside. The brokerage initiates coverage on KNPL with an ADD Reco & DCF-based TP of Rs. 500/sh (implying 44x Sep-22 P/E).

Promoter/FII Holdings
Promoters held 74.99 per cent stake in the company as of June 30, 2020, while FIIs held 4.37 per cent, DIIs 7.77 and public and others 13.26 per cent
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