Auto sector pain rubs off on Kansai Nerolac, input costs compound woes

While the automobile sector accounts for a third of Kansai Nerolac's revenues, analysts are also skeptical about demand from the retail segment

The declining demand in the domestic auto market is forcing automakers to cut production. This is impacting auto suppliers such as Kansai Nerolac which shed 5 per cent intraday on Friday. Around one-third of Kansai Nerolac Paints' business comes from automobile sector and it has around 60 per cent market share in this segment.

The falling volumes in the industrial (including auto) segment poses a downside risk for the company’s top line. What aggravates the situation is that brokerages such as CLSA are cautious even on retail demand (decorative paints). It was the decorative segment which aided company’s December 2018