KANSAINER - Investment Analysis

Last Updated Time : 02 Aug 25, 12:58 am

📊 Investment Analysis: Kansai Nerolac Paints Ltd. (₹242)

Investment Rating: 3.1

This is a fundamentally solid, low-leverage player in the paints and coatings space, but currently lacks high-growth metrics to justify aggressive accumulation. Let's unpack the story here

🎨 Fundamental Snapshot

ROE: 9.85%, ROCE: 13.0%

🟡 Moderate profitability — not in line with leaders in this segment like Asian Paints, but stable.

Debt-to-Equity: 0.05

✅ Excellent financial discipline — nearly debt-free, which supports margin stability during slowdowns.

PEG Ratio: 1.56

❌ Slightly elevated — suggests growth is not cheap; valuation moderately stretched.

Dividend Yield: 1.03%

🟢 Acceptable yield for a conservative portfolio — adds income cushion.

EPS: ₹14.1, P/E: 33.1 vs Industry PE: 45.4

⚖️ Fairly valued compared to industry average — downside is likely limited.

📉 Technical View & Trend Signals

DMA 50: ₹248, DMA 200: ₹256

Currently trading below both — signals short-term weakness; ideal for long-term accumulation.

RSI: 40.3, MACD: -1.24

Oversold zone — strong potential for technical rebound.

Volume: Weak vs avg.

Low trading interest — ideal for patient investors, not momentum chasers.

PAT Q/Q: ▼ 39%

Recent earnings miss — possibly seasonal or input-cost related, but bears watching.

📍 Ideal Entry Price Zone

Buy Range: ₹220–₹235

Corresponds with recent support and technical exhaustion zones.

Accumulate slowly during dips — best during muted market phases or post-results.

📆 Exit Strategy / Holding Period

If already holding the stock

Holding Horizon: 2–3 years (long-term defensive)

It’s a slow compounder — ideal for wealth preservation with low downside risk.

Exit Range: ₹295–₹320

Book partial gains if valuation expands disproportionately to earnings or EPS stagnates.

Reevaluation Triggers

ROE consistently <9%

PEG ratio >2 without matching EPS growth

Two or more quarters of consecutive PAT decline

Sluggish volume + RSI below 35 for extended period

🧭 Verdict

Kansai Nerolac is a low-volatility, moderate-growth story ideal for conservative portfolios. While short-term momentum is lacking, its valuation, low debt, and brand stability make it a decent long-term candidate — especially if you're balancing riskier bets in your basket.

Want me to run a peer comparison with Akzo Nobel or Asian Paints to identify leadership potential? I'm ready to paint that canvas for you. 🎨

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