Earnings Update: Kansai Nerolac Paints Limited (NSE:KANSAINER) Just Reported Its First-Quarter Results And Analysts Are Updating Their Forecasts

Shareholders of Kansai Nerolac Paints Limited (NSE:KANSAINER) will be pleased this week, given that the stock price is up 12% to ₹307 following its latest first-quarter results. Results look mixed - while revenue fell marginally short of analyst estimates at ₹21b, statutory earnings were in line with expectations, at ₹14.65 per share. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. Readers will be glad to know we've aggregated the latest statutory forecasts to see whether the analysts have changed their mind on Kansai Nerolac Paints after the latest results.

Check out our latest analysis for Kansai Nerolac Paints

After the latest results, the six analysts covering Kansai Nerolac Paints are now predicting revenues of ₹81.6b in 2025. If met, this would reflect an okay 4.9% improvement in revenue compared to the last 12 months. Statutory earnings per share are predicted to expand 12% to ₹9.36. Yet prior to the latest earnings, the analysts had been anticipated revenues of ₹84.4b and earnings per share (EPS) of ₹8.91 in 2025. So it's pretty clear that while sentiment around revenues has declined following the latest results, the analysts are now more bullish on the company's earnings power.

There's been no real change to the average price target of ₹311, with the lower revenue and higher earnings forecasts not expected to meaningfully impact the company's valuation over a longer timeframe. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. The most optimistic Kansai Nerolac Paints analyst has a price target of ₹375 per share, while the most pessimistic values it at ₹230. These price targets show that analysts do have some differing views on the business, but the estimates do not vary enough to suggest to us that some are betting on wild success or utter failure.

One way to get more context on these forecasts is to look at how they compare to both past performance, and how other companies in the same industry are performing. It's pretty clear that there is an expectation that Kansai Nerolac Paints' revenue growth will slow down substantially, with revenues to the end of 2025 expected to display 6.5% growth on an annualised basis. This is compared to a historical growth rate of 11% over the past five years. By way of comparison, the other companies in this industry with analyst coverage are forecast to grow their revenue at 11% per year. Factoring in the forecast slowdown in growth, it seems obvious that Kansai Nerolac Paints is also expected to grow slower than other industry participants.

The Bottom Line

The biggest takeaway for us is the consensus earnings per share upgrade, which suggests a clear improvement in sentiment around Kansai Nerolac Paints' earnings potential next year. On the negative side, they also downgraded their revenue estimates, and forecasts imply they will perform worse than the wider industry. Yet - earnings are more important to the intrinsic value of the business. The consensus price target held steady at ₹311, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Kansai Nerolac Paints going out to 2027, and you can see them free on our platform here..

And what about risks? Every company has them, and we've spotted 2 warning signs for Kansai Nerolac Paints you should know about.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com