Kansai Nerolac margin drops as expenses outpace revenue
Revenue grew year on year, but faster cost growth and a sharp sequential margin decline weakened operating performance.
Filed 04 Nov 2026, 19:21 IST · after market close · Kansai Nerolac Paints Ltd (KANSAINER)
Key takeaways
- Consolidated revenue grew +18.59% year on year, but expenses grew faster at +20.38%, narrowing operating margin by 1.35 percentage points to 9.67%.
- Sequentially, revenue fell -2.37% while expenses rose +2.35%, cutting operating margin by 4.16 percentage points and net profit by -36.96%.
- Net profit rose +8.01% year on year, helped by a 3.10-percentage-point fall in the tax rate, while other income contributed 18.64% of pre-tax profit.
Price around the results
Revenue growth failed to convert into operating profit
Kansai Nerolac’s consolidated revenue grew +18.59% year on year to Rs 2,317.38 cr, but expenses increased faster at +20.38%. That limited operating-profit growth to +4.10% and reduced operating margin by 1.35 percentage points. Sequentially, revenue declined -2.37% even as expenses rose +2.35%, pointing to weaker operating leverage in Q2FY27.
Sequential margin fall was the quarter’s main weakness
Operating margin fell to 9.67% from 13.83% in Q1FY27, a decline of 4.16 percentage points, as costs grew while revenue contracted. Depreciation increased only 0.54% sequentially and interest declined -3.49%, so the margin pressure was mainly at the operating-cost level. Other income accounted for 18.64% of pre-tax profit, making earnings quality less dependent on operations than the headline profit figure suggests.
Margin is below peers and lower than a year ago
The 9.67% operating margin was 2.24 percentage points below the 11.91% median for 223 Consumer Discretionary peers that had reported the same quarter. The margin was also below 11.02% in Q2FY26 and 11.08% in Q4FY26, although it had risen to 13.83% in the preceding quarter. Net profit still grew +8.01% year on year, helped by the tax rate falling to 23.52% from 26.62%.
No post-results market reaction is available yet
The consolidated results were filed after market close, so there is no post-results stock move to assess yet. After the last eight results, the stock rose three times and fell five times, with a median absolute move of 2.58%.
Q2FY27 at a glance
Consolidated figures as filed with NSE — filed ahead of third-party databases, not yet independently cross-checked.
| Line item | Q2FY27 | Q1FY27 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,317 cr | ₹2,374 cr | -2.37% | +18.59% |
| Other income | ₹35 cr | ₹55 cr | -36.11% | +23.46% |
| Expenses | ₹2,093 cr | ₹2,045 cr | +2.35% | +20.38% |
| Operating profit | ₹224 cr | ₹328 cr | -31.76% | +4.10% |
| Operating margin (%) | 9.67% | 13.83% | — | — |
| Interest | ₹8 cr | ₹8 cr | -3.49% | +0.39% |
| Depreciation | ₹63 cr | ₹63 cr | +0.54% | +16.31% |
| Profit before tax | ₹188 cr | ₹312 cr | -39.74% | +3.64% |
| Tax | ₹44 cr | ₹84 cr | -47.31% | -8.42% |
| Net profit | ₹144 cr | ₹228 cr | -36.96% | +8.01% |
| EPS (₹) | ₹1.81 | ₹2.86 | -36.71% | +8.38% |
Operating margin of 9.67% compares with a Consumer Discretionary sector median of 11.91% across 223 peers that have reported Q2FY27.
What to watch
- Whether operating margin recovers from 9.67% after the 4.16-percentage-point sequential decline.
- Whether expenses continue to grow faster than revenue after rising +2.35% sequentially against a -2.37% revenue change.
- Whether other income remains close to 18.64% of pre-tax profit.