Buy Kansai Nerolac Paints, target Rs 500 : Vikas Sethi

Vikas Sethi of Sethi Finmart has a buy call on Kansai Nerolac Paints Ltd. with a target price of Rs 500 .The current market price of Kansai Nerolac Paints Ltd. is Rs 380 Time period given by the analyst is a year for Kansai Nerolac Paints Ltd. price to reach defined target. This is a leading paint manufacturer with a pretty strong pedigree. The company reported pretty good set of numbers for the June quarter where they reported say growth in the net profits by around 33%. The margins also improved quite considerably. The margins went up by around 238 bps because of the lower crude prices and the company would continue to report pretty strong set of numbers over the next few quarters. This is mainly because of the good monsoon which we have had which would lead to a recovery in the rural economy and to add to that the government’s focus on housing, the Seventh Pay Commission that will all be pretty positive for this stock. This company again is pretty solid. It has pretty solid fundamentals. The financials are pretty good. Balance sheet is pretty strong with high margins and high return ratios and as far as the valuations are concerned, the stock trades at significant discount to its peers like an Asian Paint or a Berger Paint.