Kansai Nerolac Paints Ltd's Q2 FY27 numbers came in soft, with revenue of Rs. 2,268.77 Cr (+18.90% YoY) and PAT growth of +8.80% YoY. Here's a quick read of what worked, what to watch, and what management said.
| Results date | November 04, 2026 |
|---|---|
| Revenue (Q2) | Rs. 2,268.77 Cr (+18.90% YoY) |
| PAT (Q2) | Rs. 148.64 Cr (+8.80% YoY) |
| EBITDA margin | 9.84% (-131 bps YoY) |
| EPS (Q2) | Rs. 1.84 (+8.90% YoY) |
Kansai Nerolac delivered 18.9% YoY standalone revenue growth but EBITDA grew only 4.9% as the material ratio jumped to 69.93% of revenue, compressing EBITDA margin to 9.84% (-131 bps YoY). H1 margin of 12.02% sits below the 13% floor of management's retained 13%-14% FY27 guidance, requiring ~14.1% H2 margin even with flat revenue. H1 operating cash flow turned negative at Rs.(78.04) Cr on inventory and receivables builds, though the near-debt-free balance sheet with Rs.2,218 Cr liquidity covers the shortfall.
| Driver | Expected before results | What happened | Verdict |
|---|---|---|---|
| Revenue | "likely ahead of the weak Q2 FY26 base" | +18.94% YoY standalone | Played out |
| Margins | "direction is compressing" on the crude/inventory/FX stack | 9.84%, −131 bps YoY / −430 bps QoQ | Played out |
| Band test | "a quarter that works within the band" (13–14%) | 9.84% — fell below the band's lower edge | Contradicted |
| Inventory swing | "more likely inventory-cost absorption than inventory gain" | QoQ margin −430 bps; inventory build on BS | Played out |
| Auto/industrial tailwind (SIAM PV +30.7%, per pre-call note, web-sourced, dated) | revenue tailwind | +18.94% aggregate revenue; segment split not disclosed | Played out at aggregate level only |
| Nerofix effectiveness | watch RoC confirmation | effect already given retrospectively; certified copies "yet to be received" | Partially |
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| What management said | Where | What happened | Verdict |
|---|---|---|---|
| EBITDA/PBDIT margin 13%–14% for FY27 | reaffirmed on the Q1 FY27 earnings call (3 Aug 2026): "the margin guidance is retained… our endeavour is to really maintain that" | Q2 9.84%; H1 12.02% (company EBITDA definition, standalone) — H1 runs ~100 bps below the band's floor | Stretch |
| Capacity capex Rs.594 Cr, Sayakha/Bawal/Hosur, phased to end FY2028-29, internal accruals | 3 Aug 2026 exchange filing | H1 capex 135.17; CWIP +38.03 to 207.29; funding covered ~25x by liquid resources — early | On Track |
| Medium-term margin >14%; long-term 15% | prior-quarter calls | 9.84% this quarter | Too Early |
| FY26 dividend 250% (Rs.2.5/share) | Board recommendation | 202.18 paid in H1FY27 | Met |
| "Healthy revenue growth… good momentum across both Decorative and Industrial" (MD, Q2 press release) | revenue +18.94% YoY standalone, strongest printed growth | Confirmed | |
| "Raw-material and FX volatility exerted pressure on input costs; calibrated pricing actions to partly mitigate" (MD, Q2 press release) | net material cost +28.33% vs revenue +18.94%; margin −131 bps YoY | Confirmed | |
| Margin guidance "retained… as of now" (Q1 FY27 call, 3 Aug 2026) | H1 margin 12.02% is below the 13% floor; Q2 9.84% — the band now needs an H2 recovery | Contradicted for the quarter |
Disclaimer: This results analysis is published for educational and informational purposes only. It is not investment advice, not a recommendation to buy, sell or hold any security.