Kansai Nerolac (KANSAINER)

FairStock Score: 39/100 — MIXED

Score breakdown: P/E: 1/3 · ROCE: 1/2 · Growth: 0/2 · Dividend: 0/1

Key Financials

Strengths

• Negligible debt with D/E of 0.04 and positive free cash flow of ₹293 Cr provide financial stability.
• High promoter holding of 74.98% aligns interests with minority shareholders.
• Five-year revenue CAGR of 9.04% shows the business has grown over a cycle.
• ROCE of 13.03% is acceptable without using leverage.
• Modest dividend yield of 1.23% provides some income while waiting for growth.

Concerns

• Profit growth is -17.78% while P/E is 26.63, so you are paying a premium for falling earnings.
• Piotroski F-score of 4/9 signals weak operating momentum and financial health.
• PEG ratio of 8.51 is far above a reasonable threshold, indicating expensive valuation relative to growth.
• Latest sales growth of only 3.13% and ROE of 10.87% are not compelling for a high-multiple stock.

AI Analysis

Let me start with the obvious: a paint company in India with 74.98% promoter holding and a debt-to-equity of 0.04 is not a business that keeps me awake at night from a balance-sheet standpoint. Free cash flow of ₹293 Cr gives it some genuine earnings quality. But my job is not to buy good companies at any price; it's to buy good companies at sensible prices. At ₹200.73, Kansai Nerolac sells at 26.63 times earnings despite profits falling 17.78%. That is not a Graham margin of safety; that is a premium price for a business that is currently shrinking on the bottom line. Revenue has grown at 9.04% over five years, but latest sales growth is only 3.13%. The momentum has slowed. ROE of 10.87% and ROCE of 13.03% are respectable but not exceptional; I want durable returns on capital closer to 15-20% for a franchise. The Piotroski F-score of 4/9 suggests weak operating fundamentals, and the PEG ratio of 8.51 tells me the market is paying a heavy price for very little growth. Book value is ₹71.62, so you are paying 2.8 times assets. None of this means it is a bad business. Kansai Nerolac has a strong parent, a national presence, and a clean balance sheet. But for the value investor, the price matters as much as the enterprise. At 26 times earnings with falling profits, I would need a clear path to growth revival before committing capital. I would rather wait for a better price or evidence that decorative demand has improved. Patience is a feature, not a bug.

Data from BSE/NSE filings. AI analysis is for educational purposes only — not investment advice. Scoring methodology · Disclaimer