Fundamentals

NILKAMAL 

Ticker : 523385
BUY: Rs 1810
Target: Rs 1995 

The company is engaged in the manufacture of plastic products and operates through three verticals, namely, moulded furniture, ready furniture and mattress. In Q1FY19, the company's revenue grew by 17 per cent YoY due to decent growth in volumes of plastics busi- ness. Its EBITDA was up by 27 per cent YoY due to better operating efficiency. The EBITDA margin stood at 9.6 per cent. The PAT for the quarter jumped by 37 per cent YoY to Rs 31 crore from Rs 22 crore. The plastics and mattresses divisions contribute highly to the company’s growth on account of the rise in demand and shift towards organised players due to GST. It plans to expand its retail store format franchise in FY19 and has capex plans of Rs 150 crore for FY19. Considering the robust growth and capacity expansion, we recommend it as a BUY.



KANSAI NEROLAC PAINTS 

Ticker : 500165
BUY: Rs 514.85
Target: Rs 570 

It is one of India’s leading paint companies and the largest player in the industrial segment. Due to rising raw material prices and fluctuation in currency, all companies across the paint industry faced operating margins pressures. But the company expects revival in volumes and revenue from Q2FY19 with expansion in industrial segment. In Q1FY19, it reported robust numbers led by double digit growth in the decorative segment. The company has launched new products in the decorative segment and is focusing on foraying into West and South Indian markets. Also, it is spending high on advertising and marketing for promoting its decorative segment. Recently, the GST rate on paints was reduced from 28 per cent to 18 per cent, which would benefit the company. Considering the positive prospects, we recommend it as a BUY.