Kansai Nerolac Paints Limited

Basic Materials — Specialty Chemicals · NSE

₹185.00+₹6.01 (+3.36%)

DalalBaazaar Score

50 / 100

🟡 Moderate

Verdict

NEUTRAL

Risk

Moderate

Driven by high debt relative to equity, small-cap size, which brings sharper price swings.

In simple words: Reasonable but unspectacular business quality, with modest growth. Debt is the main factor to watch.

Decision support, not a buy or sell call.

As of 18 Oct 2026, 6:10 pm

Mixed / neutral. No major red flags jump out, but nothing here screams "obviously cheap" either. This is a name that needs a peer comparison and a view on near-term earnings triggers before sizing a position.

Understanding the Business

Company site ↗

The 60-second version of Kansai Nerolac Paints Limited — what it does, how it earns, and who it competes with, before any of the numbers below.

What does this company do?

Kansai Nerolac Paints Limited engages in the manufacture and supply paints, varnishes, enamels, and lacquers in India.

IndustrySpecialty Chemicals

SectorBasic Materials

Employees3,804

Annual revenue₹8,023 Cr

How does it make money?

Turns over ₹8,023 Cr a year. Of every ₹100 of sales, about ₹7 reaches shareholders as profit, with ₹12 left at the operating level before interest, tax and depreciation. Each of its 3,804 employees supports ₹2.11 Cr of revenue a year, the signature of a capital- or asset-led business.

EBITDA margin12.2%

Net margin7.3%

Revenue / employee₹2.11 Cr

Who are its competitors?

The closest listed comparisons in its industry are ASIAN PAINTS LIMITED, PIDILITE INDUSTRIES LTD, SRF LTD, UPL LIMITED. These are the companies its valuation and returns are measured against elsewhere in this report.

ASIAN PAINTS LIMITEDP/E 46.9x · ROE 22.3%

PIDILITE INDUSTRIES LTDP/E 57.8x · ROE 24.4%

SRF LTDP/E 33.8x · ROE 15.4%

UPL LIMITEDP/E 21.5x · ROE 6.1%

What is its competitive advantage?Little sign of one

Returns on capital of 11.8% are at or below what the capital likely costs. That is the financial pattern of a business competing largely on price, where advantage has to come from execution rather than position.

ROCE11.8%

ROE8.8%

Peer median ROE22.3%

What is the outlook?

14 analysts covering the stock expect revenue to grow about 7.5% and earnings to grow about 12.2% in the year to 2028. These are estimates by people who follow the company, not a forecast for the wider industry.

Est. revenue growth+7.5%

Est. earnings growth+12.2%

Analysts14

What has been driving growth?

Profit has moved mainly because margins changed, not because the business sold much more. Over 3 years revenue moved +7% while net margin moved +16% relative to itself. What this cannot tell you is which products, customers or geographies did the work — that lives in the segment disclosures of the annual report.

Revenue effect+7%

Margin effect+16%

DalalBaazaar Score

50/ 100

Moderate

Weighted across six categories. Every point is explained below.

✗ Revenue CAGR of only 2.2% — barely ahead of inflation
✗ Profit CAGR of only 7.6%

Quality vs. Valuation

Company Quality

51/ 100

Average

How good the business is, ignoring the share price entirely.

Valuation

47/ 100

Fair

What you are being asked to pay, ignoring how good the business is.

A reasonable business at a reasonable price — neither the quality nor the valuation stands out in either direction.

Historical Valuation

Current P/E

24.9x

3Y Median

19.2x

40 monthly readings · mean 28.1x · range 11.8x–58.3x

Sector Median

40.4x

median of 4 sector peers

⚠️Current valuation is approximately 30% above its 3y median of 19.2x. Paying more than usual needs a reason — faster growth, a better balance sheet, or a re-rating you believe in.

🟢Against its sector it trades 38% below the peer median of 40.4x.

vs. its own history

Expensive

19.2x median over 40 months · +30%

vs. sector peers

Cheap

40.4x median of 4 peers · -38%

vs. generic bands

Fair

15x–35x

P/E (Trailing)

24.9x

P/B

2.23x

EV/EBITDA

15.4x

PEG

3.29

Dividend Yield

1.35%

What's Good / What's Bad

🟢 What's Going Well2

Cash generation is improving
Free cash flow is up 139% over 3 years.
Consistently profitable
Profitable in every one of the last 4 reported years.

🔴 What Needs Attention2

Return on capital is falling
ROCE has declined from 13.8% to 11.8% — often a sign of competition or overexpansion.
Valuation above its historical average
At 24.9x the stock trades 30% above its own median of 19.2x.

Red Flags

1 item require attention · 1 high

🔴High leverageFinancial
Debt/Equity of 4.53x — earnings must service borrowings before shareholders see anything.

Investment Thesis

🟢 Bull CaseWhat could make this work?

Cheaper than its peers
It trades 38% below the sector median. Either the market sees a problem the numbers do not show, or the discount closes.
Earnings have proved durable
Profitable in every one of the last 4 reported years. Consistency lowers the risk that any single bad year is structural rather than cyclical.

🔴 Bear CaseWhat could go wrong?

Leverage amplifies any setback
Debt/Equity of 4.53x. Interest is payable whether or not the business has a good year.
The price already assumes success
The stock trades 30% above its own median multiple. At this level the business has to deliver just to stand still, and a stumble is repriced twice — lower earnings on a lower multiple.
Growth barely outpaces inflation
Revenue compounding at 2.2% a year is close to the rate prices rise, so the business is gaining little ground in real terms. That leaves the share price dependent on a re-rating rather than on earnings growth.
Earnings are hard to forecast
Profit has swung sharply from year to year, so any single year — good or bad — is a weak guide to the next. Cyclical earnings deserve lower multiples for that reason.
Size brings its own risk
Small Cap businesses are thinly traded, so exits are harder in a falling market and single events move the price more than they would for a larger company.

🟡 Key Things to WatchMeasurable tripwires, set against where this company stands today

1EBITDA margin holds above 10%✓ 12.2%
Two points below today's level — enough room for noise, tight enough to catch real compression.
2Revenue growth stays above 4% a year✗ 2.2% CAGR
Latest reported year was 9.8%. The bar is set below the established compounding rate, so ordinary variation does not trip it.
3Free cash flow remains positive✓ ₹681 Cr
Profit that never becomes cash eventually stops being profit.
4Debt / EBITDA stays below 2x✓ 0.3x
The ratio lenders write covenants against; it survives a small or negative equity base, unlike Debt/Equity.
5ROCE stays above 9%✓ 11.8%
Falling returns on capital are usually competition arriving, and show up here before they reach the margin.

Investment Checklist

7 / 12 checks passed

✗ Strong return on equity (ROE ≥ 15%)
✗ Strong return on capital employed (ROCE ≥ 15%)
✗ Healthy net margin (≥ 10%)
✓ Generates positive free cash flow
✗ Manageable leverage (Debt/Equity < 1.0)
✓ Adequate short-term liquidity (Current Ratio ≥ 1.0)
✓ Revenue growing year-over-year
✓ Profit growing year-over-year
✓ Not trading at an extreme valuation (P/E < 40x)
✓ Not buying right at the 52-week high
✓ Analyst consensus isn't majority-sell
✗ Short-term technical trend isn't bearish

Price history

Quick Metrics

2 good · 8 neutral · 1 weak

Market Cap

₹14,964 Cr

Small Cap

Smaller company — thin liquidity and deep drawdowns are normal here

P/E (Trailing)

24.9x

Fair

Fairly valued against the generic band

P/B Ratio

2.23x

Fair

Moderate premium to the company's book value

EPS (TTM)

₹7.42

Profitable

Profitable on a per-share basis

ROE

8.8%

Moderate

Moderate capital efficiency

ROCE

11.8%

Moderate

Moderate return on the capital in the business

Debt/Equity

4.53x

High

High leverage

Revenue Growth (YoY)

9.8%

Modest

Modest growth

Profit Growth (YoY)

4.8%

Modest

Slow profit growth

Dividend Yield

1.35%

Modest

Small cash return — most of the return has to come from the price

Free Cash Flow

₹681 Cr

Cash generative

Generates cash even after funding its capex

More Metrics

CMP

₹185

P/E (Forward)

18.5x

Improving

Below the trailing multiple — the street expects earnings to grow into the price

Operating Margin

11.2%

Average

Average margins

Net Margin

7.3%

Average

Average bottom-line conversion

Current Ratio

3.48

Comfortable

Healthy short-term liquidity

Beta (vs Nifty)

0.39

Defensive

Steadier than the market

52W Range Position

26%

Mid-range

Technical Snapshot

SMA 20 / SMA 50

180.9 / 191.7

Bearish alignment (short < long)

Price vs SMA 200

Below

Long-term downtrend

RSI (14)

54.3

Neutral momentum

Financial Trend (4-Year)

Metric	FY23	FY24	FY25	FY26	3Y CAGR
Revenue	₹7,505 Cr	₹7,768 Cr	₹7,787 Cr	₹8,023 Cr	+2.2%
EBITDA	₹825 Cr	₹1,049 Cr	₹926 Cr	₹981 Cr	+5.9%
EBITDA Margin	11.0%	13.5%	11.9%	12.2%	—
PAT (Net Profit)	₹474 Cr	₹1,185 Cr	₹1,143 Cr	₹589 Cr	+7.6%
EPS	₹5.86	₹14.65	₹14.12	₹7.28	+7.5%
ROE	10.4%	21.2%	17.8%	8.8%	—
ROCE	13.8%	27.0%	22.3%	11.8%	—
Total Debt	₹287 Cr	₹276 Cr	₹296 Cr	₹303 Cr	+1.8%
Free Cash Flow	₹285 Cr	₹666 Cr	₹346 Cr	₹681 Cr	+33.7%

🟢 Revenue has grown at 2.2% a year over 3 years.

🟢 EBITDA has grown at 5.9% a year over 3 years.

🟢 EBITDA Margin has risen from 11.0% to 12.2% over 3 years (+1.2 pts).

🟢 PAT (Net Profit) has grown at 7.6% a year over 3 years.

🟢 EPS has grown at 7.5% a year over 3 years.

🔴 ROE has fallen from 10.4% to 8.8% over 3 years (-1.7 pts).

🔴 ROCE has fallen from 13.8% to 11.8% over 3 years (-2.1 pts).

🟡 Total Debt has been broadly flat over 3 years (1.8% a year).

🟢 Free Cash Flow has grown at 33.7% a year over 3 years.

Balance Sheet & Cash Flow — FY2026

Total Assets

₹8,711 Cr

Total Liabilities

₹2,022 Cr

Total Debt

₹303 Cr

Cash & Equivalents

₹197 Cr

Operating Cash Flow

₹894 Cr

Capex

-₹213 Cr

Shareholding (proxy)

Institutional Holding

10.5%

Insider Holding

74.9%

Corporate Actions

Next Earnings

04 Nov 2026

Dividend Rate

₹2.5

Ex-Dividend Date

29 Jun 2026

Analyst Consensus

Recommendations

11 Buy · 3 Hold · 3 Sell

Target Price (Mean)

₹247.41

+33.7% vs CMP

Target Range

₹193 – ₹316

Peer Comparison

Company	P/E	ROE
ASIAN PAINTS LIMITED	46.9x	22.3%
PIDILITE INDUSTRIES LTD	57.8x	24.4%
SRF LTD	33.8x	15.4%
UPL LIMITED	21.5x	6.1%

Recent News

2 positive1 mixed3 general

Kansai Nerolac Paints (NSEI:KANSAINER) Stock Forecast & Analyst Predictions

Simply Wall Street, 09 OctAnalyst view

🟡Mixed / dependsBroker commentary — an opinion about the price rather than new information about the business.

Is Kansai Nerolac Paints the Best Stock in Its Sector? A Look at the Numbers

Univest, 16 Oct

Berger Paints India Ltd (BERGEPAINT) Share Price

Business Today, 16 Oct

Monarch Networth initiates coverage on Asian Paints, Colgate and Kansai Nerolac; sees up to 17% upside

The Economic Times, 05 Aug

Kansai Nerolac Q1 Results: Profit Rises 5%, Revenue Crosses Rs 2,300 Crore

NDTV Profit, 03 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Kansai Nerolac Q1 results: Paint maker’s net profit rises 5% to ₹232 crore, margins drop on raw material cost hike

Upstox, 03 AugResults

🟢Potentially positiveReported improvement. Check whether it came from volume, price or a one-off item before treating it as a trend.

Watch Items

Cross-check against the company's latest quarterly filing / investor presentation before acting.

DalalBaazaar Thesis

🟡Business QualityAdequate10.5/20

🟢Financial HealthStrong13.9/20

🔴GrowthWeak7.4/20

🔴ProfitabilityWeak6.2/15

🟡ValuationFair7.3/15

🔴RiskHigh4.3/10

Unremarkable in both directions

A reasonable business at a reasonable price. Nothing here is alarming and nothing is compelling, which usually means the decision rests on things this data cannot see — the industry's direction, management's intent, and what else is available to you. 1 high-severity red flag sits above this conclusion and should be read first.

This thesis breaks if

✓EBITDA margin holds above 10%12.2%
✗Revenue growth stays above 4% a year2.2% CAGR
✓Free cash flow remains positive₹681 Cr
✓Debt / EBITDA stays below 2x0.3x
✓ROCE stays above 9%11.8%