Paint stock jumps after Q4 surprise: Kansai Nerolac surges 10%; should you buy now?

Kansai Nerolac Paints Share Price Target: Shares of Kansai Nerolac Paints traded sharply higher on May 7 after the company reported stronger-than-expected results for the March quarter (Q4 FY26), supported by healthy growth across its decorative and industrial coatings businesses.

The stock rose as much as 10.8 per cent during intraday trade before giving up part of the gains. At around 12:52 PM, the stock was trading at Rs 212.35 on the National Stock Exchange, up Rs 10.92 or 5.42 per cent for the day.

The rally was accompanied by strong trading activity. Nearly 0.40 million shares changed hands during the session, significantly higher than the stock’s recent two-week average trading volume of around 0.019 million shares.

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The sharp move in the stock came after the company reported improvement in revenue, profitability and margins for the March quarter.

Q4 revenue rises 7.5 per cent

Kansai Nerolac reported consolidated revenue of Rs 1,950 crore for Q4 FY26, registering a growth of 7.5 per cent compared to the same quarter last year. The company said growth was driven by healthy demand in both the decorative paints and industrial coatings segments.

The industrial business continued to benefit from recovery in the automobile sector, while decorative paints also witnessed gradual improvement in demand trends.

Margins improve on lower input costs

The company reported consolidated EBITDA of Rs 216.5 crore for the quarter, up 30.6 per cent year-on-year. Adjusted net profit rose 20.7 per cent to Rs 130.7 crore.

Operating margins also improved during the quarter. EBITDA margin expanded by 196 basis points year-on-year to 11.1 per cent.

Gross margins improved by 20 basis points, supported by lower commodity prices during January and February 2026, along with lower-cost inventory benefits during March.

Management stated that while the company has implemented selective price hikes recently, there may not be any immediate need for further increases if crude oil prices stabilise around the USD 100 per barrel level.

The company also retained its near-term EBITDA margin guidance of 13–14 per cent.

Kansai Nerolac Paints Share Price Target: What do brokerages expect

Following the quarterly results, ICICI Securities maintained its “Add” rating on Kansai Nerolac with a target price of Rs 230. The brokerage believes FY27 could mark a recovery phase for both the paint sector and the company. According to ICICI Securities, recent price hikes in the low-teens range are likely to support revenue growth going forward.

The brokerage also pointed to recovery in the automobile sector, possible GST reductions, and various company initiatives such as cost-saving measures, product launches and expansion in project business as factors that could support earnings growth over FY27 and FY28.

It added that despite rising commodity prices, stronger revenue growth and operating leverage could help support margins.

HDFC Securities maintained a “Reduce” rating on the stock with a target price of Rs 220. The brokerage said that while recent price hikes have helped offset near-term margin pressure, future profitability remains dependent on raw material cost trends.

The brokerage, however, raised its EBITDA and profit estimates for FY27 and FY28 following the quarterly results.

Meanwhile, Morgan Stanley retained its “Underweight” rating with a target price of Rs 191. Morgan Stanley said the company’s Q4 performance was largely in line with expectations, with the automobile segment continuing to report double-digit growth. Industrial coatings recorded mid-single-digit growth, while decorative paints witnessed low-to-mid single-digit growth during the quarter.

The brokerage also noted that despite cumulative price hikes in the decorative segment between March and May, volume growth has remained stable so far.