Kansai Nerolac: Higher cost hits performance


The stock of Kansai Nerolac was up about 1 per cent last week despite the dip in profit in the recent March quarter. The steady increase in raw material costs of the company has impacted its margins and bottom-line, though the firm reported double-digit volume growth in all its segments.

The company registered a revenue growth of 17 per cent y-o-y (net of excise duty), mainly attributed to the strong recovery in the decorative and industrial paint segments. Since most of its raw materials are crude derivatives, the increase in crude oil prices has impacted its margins at the operational level.

Thus, the company’s operating margins were down by 2 percentage points, thanks to its sustained efforts to take price increases which, to some extent, have aided margins.

The profits declined by about 9 per cent y-o-y during the March quarter. The volatility in crude prices is a cause for concern as a chunk of its raw material is in the form of crude derivatives.


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