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KANSAINER - Fundamental Analysis: Financial Health & Valuation
Last Updated Time : 05 Nov 25, 7:43 am
Back to Fundamental ListFundamental Rating: 3.6
📊 Financial Overview
- Profitability: PAT stood at ₹231 Cr, down 4.25% QoQ, with EPS at ₹12.5, indicating stable earnings.
- Return Metrics: ROE at 10.4% and ROCE at 14.0% are moderate, reflecting decent capital efficiency.
- Valuation: P/E of 30.6 is below the industry average (43.1), suggesting relative undervaluation.
- P/B Ratio: With a book value of ₹78.8 and price of ₹248, P/B is ~3.15, indicating a fair premium.
- PEG Ratio: 1.63 suggests moderate overvaluation relative to growth expectations.
- Debt Profile: Debt-to-equity ratio of 0.03 reflects a strong balance sheet with minimal leverage.
- Momentum: RSI at 51.8 and MACD at 1.64 indicate neutral to mildly bullish sentiment.
🏢 Business Model & Competitive Edge
- Kansai Nerolac is a leading decorative and industrial paints manufacturer with a strong brand presence in India.
- It benefits from a wide distribution network, strong OEM relationships, and focus on innovation in coatings and finishes.
- Its diversified product mix across automotive, decorative, and industrial segments provides revenue stability.
💡 Entry Zone Recommendation
- Current price is aligned with DMA 50 (₹248) and slightly below DMA 200 (₹251), indicating consolidation.
- Suggested Entry Zone: ₹235–₹245 for accumulation.
- Long-term holding is viable if earnings growth resumes and margin expansion continues.
✅ Positive
- Low debt-to-equity ratio enhances financial flexibility.
- FII holdings increased by 0.21%, indicating renewed foreign interest.
- Strong brand equity and diversified product portfolio across industrial and decorative segments.
⚠️ Limitation
- QoQ PAT decline (-4.25%) may reflect margin pressure or input cost volatility.
- PEG ratio above 1.5 suggests valuation is slightly stretched relative to growth.
- ROE and ROCE are moderate compared to top-tier peers in the sector.
📉 Company Negative News
- DII holdings declined by 0.17%, indicating cautious domestic sentiment.
- Stock has corrected ~15% from its 52-week high of ₹291.
📈 Company Positive News
- Strong YoY PAT growth and stable EPS performance.
- Increased FII interest and improving volume trends in the industrial segment.
🏭 Industry
- The paints and coatings industry benefits from urbanization, real estate growth, and rising disposable income.
- Industry P/E of 43.1 supports moderate valuation for established players with strong distribution networks.
🧾 Conclusion
- Kansai Nerolac is a stable player in the paints sector with a strong balance sheet and brand presence.
- Entry near ₹235–₹245 offers a reasonable long-term opportunity for value-conscious investors.
- Monitor earnings consistency and margin trends for sustained performance.
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