ICICI Securities
Kansai Nerolac Paints (Add)
CMP: ₹519.55
Target: ₹565
Analysis of historical multiples of
With Kansai trading near its mean PE+ 1SD, we believe, there is limited stock price upside via multiple re-rating and earnings growth will be a key driver for stock price movement. We expect the company to report PAT CAGR of 21.5 per cent over FY19-FY22E and improve its return ratios across the same timeframe. Maintain ‘add’ rating with a DCF-based target price of ₹565 (implied P/E 39x September 21E).
Key risk: Sharp increase in input prices as well as competitive pressures may impact our earnings estimates on Kansai Nerolac.