Ladies and gentlemen, good day and welcome to Kansai Nerolac Paints Q3 FY 2026 earnings conference call hosted by ICICI Securities Limited. As a reminder, all participants' line will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Aniruddha Joshi from ICICI Securities Limited. Thank you, and over to you.
Yeah, thanks, Ikra. On behalf of ICICI Securities, we welcome you all to Q3 FY 2026 and nine months FY 2026 results conference call of Kansai Nerolac Paints Limited. We have with us today senior management represented by Mr. Pravin Chaudhari, Managing Director, Mr. Yash Ahuja, Chief Financial Officer, and Mr. Jason Gonsalves, Director, Corporate Planning, IT, and Materials. Now, I hand over the call to the management for initial comments, and then we will open the floor for question and answer session. Thanks, and over to you, Pravin sir.
Yeah. Good morning, all of you. I'll request Jason to walk you through a brief presentation and the comments.
So good morning, everyone, and greetings to you. I'm grateful for your continued support and interest in our company. Thanks for joining this investor call of Kansai Nerolac. I'll begin by going through our presentation. One of the first slides is on the Nerolac purpose and vision. Our purpose is to create environments for a healthy and beautiful future, and our vision is to design solutions that protect, inspire, and touch lives every day. Kansai Nerolac is a water-positive company, and it's committed to reduction of emissions and improving the percentage of green energy used by the organization. When it comes to our brand, our legacy is very strong. We have a 100-year-old excellence model.
Our robust strength lies in R&D capabilities and strategic technology partnerships, especially in the industrial segment, where we deliver continuously cutting-edge solutions across diverse applications. Despite intense competition, our brand continues to command attention. We proudly hold the position of a second-most recognized brand in terms of the brand equity index nationwide. Our Nerolac jingle, which has been there for more than three decades, also resonates across various age groups. I think that's another asset that we have created, and we are leveraging it pretty well. Our spirit of innovation is deeply rooted in advanced Japanese technology, which has been the driving force behind our industrial business. Looking ahead, this same technological edge will increasingly shape our decorative segment, enabling us to continuously introduce breakthrough concepts that align with growing demand for premium products.
A prime example of this was our Paint+ range, an exclusive line of category-defining products launched a few years ago, offering Indian consumers a truly differentiated experience in decorative paints. Coming to the business environment, during the quarter, we saw a very good demand for automotive products, fueled primarily by GST cuts, the continued focus of government on infrastructure. Of course, there was extended monsoon in the beginning of the quarter. This time, the festive season was shorter because of an early Diwali. The quarter also saw a lot of geopolitical conflicts and tariff wars. Rupee was depreciated significantly in the quarter, and crude price remained range-bound. Coming to business highlights in decorative, among the key things that have happened during the quarter, Paint+ group of products which we had launched today, their contribution to overall decorative business is greater than 10%.
The project and institutional business has shown a double-digit growth. We have been able to add 3,500 dealers in our network as of December 25. Our specialty stores that the Nerolac NextGen Shop-in- Shop and Nerolac Plus Paint Zones today, the network is more than 600+. We have a strong double-digit performance in construction chemicals, waterproofing, and premium wood finishes. Services have continued to grow and are contributing more than 5% to our overall decorative business. During the year, we have launched 11 new products, and new products' contribution to decorative business remains pretty stable.
Among the innovations that we have launched during this quarter is the Excel Everlast 20, a product which offers 20 years performance, having superior weather resistance, including non-fading of shades and waterproofing property, as well as water-based Excel Total Floor Coat, which is a product which offers excellent resistance to abrasion, algae resistance, and resists hot tire marks, especially designed for paver blocks and cement tiles. In industrial, in automotive four-wheelers, we have launched a BTX-free metallic monocoat matte product for interiors of cars, a 1K common conductive primer having superior adhesion on multiple plastic substrates. For the two-wheeler industry, we have developed a PU matte metallic monocoat, and we have implemented against the existing two-coat system, having superior properties of no color transfer and of petrol rub after zero hours of post-baking, and no gloss variation in broader workability band.
For the commercial vehicle segment, we introduced low-bake epoxy CED black, which will help reduce the baking condition significantly. In the performance coating liquid segment, we have introduced low-bake backcoat and topcoat for coil coating, which have both been approved and commercial supplies have started. In the powder coating segment, we have introduced high-scratch resistance coatings, especially designed in matte black and matte white variant. Coming to our media campaigns, our Ghar Ki Ronak campaign was extensively run. Our iconic jingle modernized to resonate with today's consumers while preserving its nostalgic charm. This refreshed sonic identity is already gaining traction, adding a vibrant new dimension to our promotional strategy and further strengthening our brand recall. This is promoted on all major media platforms like TV during the Asia Cup, radio, audio, digital videos, banners, and social media influencers.
Coming to branding and marketing, our brand and marketing investments have remained strong with impactful campaigns running across both television and digital platforms. These efforts are designed to deepen consumer engagement and reinforce Nerolac identity in the minds of our audience. Coming to industrial highlights, in automotive, the auto segment witnessed very strong growth in Q3 fueled by GST 2.0, and there has been a strong focus on innovation and creating new technologies to increase total addressable market. In performance coating in the liquid segment, we witnessed very strong demand in the general industrial segment, driven primarily by construction equipment and pre-engineered buildings. In powder coating, we were able to have a stable demand momentum driven by auto ancillaries, electrical appliances, and furniture segment. In auto refinishes, we witnessed a stable demand during the quarter.
In the premium PU segment, we have had notable body shop wins, and the conversion from solvent-borne to waterborne systems is transitioning as per plan. We won a number of accolades during the year: the Dragons of Asia Marketing Award in Q2 2025, we were the gold winner in Ambient Media in Q1 2025, the Goaf est in Q1 2025, Seven Baby Blue Elephant Awards. We won significant awards from automotive majors like TAFE, Maruti Suzuki, and Suzuki Motorc ycle India. Coming to the area of ESG, KNP was rated in B category in climate change and water security in the CDP cycle 2025, and we were rated in the top 12 percentile within the chemical industry group in the S&P Global Large and Medium Midcap ESG Index 2025.
In CSR, through our initiatives, we remain deeply committed to driving positive change in the area of education, healthcare, women's entrepreneurship, and skill development. These efforts reflect our ongoing dedication to giving back to society in meaningful and sustainable ways, empowering communities, and fostering inclusive growth. Coming to our financial results for the quarter, our growth in net revenue was +3.5%. For PBDIT, it was +0.2%, and PBT before exceptional items was -3.7%. On a YTD basis, for standalone, the net revenue grew by +1.9%. PBT is down by -3.2%, and PBT before exceptional items is down by -4%. On a consolidated basis, for quarter three, our net revenue is up by +3.1%, PBDIT by +2%, and PBT before exceptional items is down by -3.7%.
For the nine months ending December, our net revenue was up by 1.5%, PBDIT is down by 2.4%, and PBT before exceptional items is down by 3.1%. Coming to risk and outlook, among the significant risks that we see are geopolitical tensions leading to supply chain disruptions and volatility in commodity prices, inflationary risks due to the tariffs uncertainty, and import cost surge due to rupee depreciation. Among outlook, as per RBI, construction activity would see a sustained momentum. Demand momentum generated by GST is expected to continue in quarter four. Automotive segment is expected to maintain growth momentum, and growth in infrastructure such as railways, roads, airports, power augur well for the paint industry and will drive demand for high-end coatings. Thank you. This marks the end of the presentation. We will now take questions and answers.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Avi Mehta from Macquarie Capital. Please go ahead.
Hi team. Thanks for the opportunity. I wanted to kind of first check with the decorative side. Could you give a sense on how the momentum was in 3Q and what gives you comfort on the recovery? Also, if you could cover if there's any change in the competitive intensity, especially after the merger of AkzoNobel and JSW.
Hi Avi.
Hi.
So for the decorative concern, October because of shorter Diwali, obviously, was not great. But what we saw as we run through this quarter, we saw that in November and December, there was quite a good recovery. So we are seeing that there's a good growth momentum which is coming back now, and we hope that continues in Q4 as well as we move into Q4. Yeah. On competition intensity, yeah, competition intensity still remains pretty intense. And as far as this Akzo and JSW is concerned, obviously, as they stated, the royalties is what they're going to pull back in the market to develop and obviously invest in either influencer or maybe media. Depends on what they prioritize. But that will remain to be seen as to how they deploy and what will be the effectiveness given their network.
But obviously, everyone is trying to protect their own market and try to grow. So I guess that intensity will continue to remain for some time now.
Got it, Pravin. Got it. Pravin, if I may just essentially on the just closing on the other side, which is the industrial side, now clearly your comments on the industrial side were a lot more constructive. Now, if automotive is seeing the kind of growth it is seeing and decorative recovery is where it is, how do you see the EBITDA-margin profile in the near term for us? And is there a risk on that 12%-13% number that you had shared we will target?
Right. So Avi, if you look at the way kind of investments you're doing either in terms of manpower, feet on street, our influencer connect programs have intensified. We're investing heavily in that, whether it is architect, whether it is painter. Our CCD machine deployments have increased. We are now close to 85% of CCD machine we're reaching that target and also very actively investing in our dealer opening. So if you look at on decorative front, we are obviously not letting the ball fall, and we are investing heavily in this area. Obviously, given that even industrial has pretty good runway as we see as far as quarter four is concerned. With all that happening, you'll see that in quarter three, we still maintain our EBITDA guidance of 13%. So I think we are very cautious of this, and I think we maintain that.
I think that is how it will be going forward. It will remain 13%-14% is what we maintain even now.
Sorry, 13%-14% EBITDA margin guidance?
Yeah. That's what we would like to maintain.
Okay. And sir, last bit on the industrial side, if you could kind of just give a sense on just a reminder of how margins differ between industrial versus decorative qualitatively, any numbers over there, and where do we stand versus pre-COVID just to understand the work that has been done over there. That's all from my side.
Right, Avi. So while we're not able to share breakup or exact number, but I can only tell you that pre-COVID, I think our profiles have dramatically improved, and as far as our industrial margins are concerned, they have also improved. And in fact, that is how we are able to also try to invest more as far as decorative is concerned and manage overall guidance. Yeah.
Okay. Okay. Thank you very much. That's all from my side.
Thank you.
You should have it.
Thank you.
Thank you. The next question is from the line of Mihir Shah from Nomura. Please go ahead.
Hi, sir. Good morning. Thank you for taking my question. So my question is on the staff cost. If I see entire last year and whatever I've seen in the past quarters of this year as well, the staff cost has remained elevated, whichever is the sales growth momentum that is there. I understand that you have been investing into higher staff cost, but then when do you expect the benefits of higher investments to start showing into the decorative volumes, especially with the dealer reach increase and the feet-on-street increases that you have been doing seems to be higher than the industry average? And I want to understand when are you expecting the investments to start yielding results? So that's my first question.
Thanks, Mihir. So yeah, you are right. I think investment is happening not only in decorative but also on the industrial side, selectively in industrial, especially in our focus areas. And we are trying to expand our segmental play as far as industrial concerned. That is also called for some kind of investment in manpower. And obviously, this allied manpower investment happens across the chain. As far as decorative is concerned, our investment that we are doing on manpower is yielding results, and we saw that in quarter three in terms of improvement in the performance metrics at town level. So I'm sure that continued effort will start yielding greater results as we move forward.
Understood. So secondly, if you could share some insights on how you've been able to hold up your older dealers and how that has changed with the competitive intensity increasing. Is there a material churn in probably the tail end of your dealers, which is why there is an impact, or there is no major churn in your dealer network and you're just keeping on building on newer dealers on this?
Yeah. So, Mihir, churn is there every year. I mean, what we have seen is percentage of churn has not changed at all. I think it remains same. The good part is our weighted reach dealer. Obviously, we are able to retain. And obviously, at the same time, acquiring new competition dealer, which is normal phenomena in the industry, that keeps happening. So there's no material change that I'm seeing. Obviously, it is the overall demand environment and intensity that is being seen. That is what is resulting in, obviously, realigning of share at each counter. But that doesn't mean that share loss is very different than what it has been in the past.
Got it. Thanks. Important to know. And so lastly, I wanted to just check on the gross margin profile. Now, third quarter, usually with the exterior paints kicking in, we have a higher margin profile. One would expect sequential improvement in gross margins. But because your industrial and auto segments, we can see the car production numbers have been robust. Maybe because of the mixed change that happened, maybe the gross margins did not sequentially see an improvement. However, going forward with that normalizing and with the input cost remaining constant, is there a possibility for gross margins probably to inch up further from these levels?
Yeah, you are right on mix front. Yeah, that's the right observation. Going forward, I think if our geopolitical situation remains as it is and if improvements that are happening currently, if that continues, I'm sure you can see some change, but I don't think there'll be dramatic change that will happen. Historically, for quarter four of ours, as far as decorative is concerned, mix is also not favorable for us. So in a way, I would say we would like to say that it will be at same level or marginally better, not significantly different as far as Q4 is concerned.
Got it, sir. Thank you. That's all from my side. Wishing you all the very best.
You too, Mihir.
Thank you. The next question is from the line of Mrunmayee J ogalekar from Asit C. Mehta Investment Intermediaries. Please go ahead.
Hi sir. Thank you for the opportunity. I hope I am audible.
Yes, you are audible, Mihir.
Okay. Sir, I wanted to know a little bit on so is the assumption correct that the deco revenue growth would still be negative in this quarter?
I would say it is marginally negative to flat. That's how it is.
Okay. So in that case then, industrial revenue would be slightly in the double-digit range growth?
Yeah, about that, touching double digit, yes.
Right. So within that, can you just give some color because auto growth would be much higher in this quarter? Is that the right thing to assume?
Sorry, can you come again?
I mean, within that 10% industrial growth, can you split it up between, say, auto and some of the other non-auto segments?
That will be difficult to say that because we don't give that breakup. Historically, that has not happened. Yeah.
Okay. Okay, sir. All right. Sir, in the Q4, because in Q3, decorative revenue had an impact in the month of October, so March should ideally be a much better growth, probably closer to mid-single digit?
As far as Q4 is concerned, yeah, that's our intent. Yeah.
Okay, sir. All right, sir. Thank you.
Thank you.
Thank you. Participants who wish to ask a question may press star and one at this time. The next question is from the line of Amnish Aggarwal, an individual investor. Please go ahead.
Hello?
Yeah. Yeah.
Hi sir, Amnish from PL Capital. I want to know what exactly is the trend in the volume growth, both in decoratives as well as in the industrial. And based on that, how does our market share stand now in comparison to what we were in the previous quarters?
Yeah. So as far as market share is concerned, industrial, we are able to grow market share. And in case of decorative, it will be about same market share. Now, as far as volume gap is concerned, volume, we have not been showing it anytime. So I don't think I'll be able to share that. But only thing I can tell you as far as deco is concerned, our volume and value gap is nil, we're exactly at same level.
I think that's a positive change from the mix point of view, and I think that is what we are trying to pursue. So it is important for us to ensure that a premium segment grows, which have done very well in quarter three. So I think that's the direction we would like to take going forward as far as deco is concerned. And as far as industrial concerned, I think typically we look at really value because that's what matters when you look at the high-end products. I think value matters more than volume. And there also, we are I think as we see things, I think we are done pretty well as far as overall industrial is concerned from volume perspective as well.
Okay, sir. I just wanted to understand how is the decorative volumes are going for Kansai and for industry because if I look at, say, market leader or any other player, everyone is today having, say, your putty, construction chemical, and waterproofing. For everyone, it is going in double digits. So even after that, if the volumes are, say, in the low single digit to mid-single digit for most players, okay, so then how is the actually, if I look at pure paints volumes, how is that volume going for the industry and for Kansai?
So frankly, because what is industry details are not available at mix level. But I guess your observation is right. The volume value gap, obviously, is signified by poor mix. And second thing is higher discounting in the existing range. Both are the components. And I think in some concern, they must have shared this. But as far as we are concerned, obviously, putty is pretty easy. You can always dump it at a higher discount, but it is not obviously making great margins. So consciously, we are not playing that. So as far as my important towns are concerned, my strong areas are concerned, obviously, I might put it as a package, but that's not what we are using as an entry point in some other areas.
As far as we are concerned, I think it is important for us to focus on the product mix and looking at the premium nature and premium improvement as far as we are concerned.
Okay, sir. Thanks a lot.
Thank you.
Thank you. The next question is from the line of Tejas Shah from Avendus Spark Institutional Equities. Please go ahead.
Hi sir. Thanks for the opportunity. Sir, you called out that competitive intensity is still very high. Just wanted to understand, is it increasing or is it kind of staying the same, A? And B, in what facet of business is it kind of surfacing the more in the sense, is it more discounts at dealer level or customer level or even at resource level on the backend beat, on human resource or raw material, securing raw material? Which all facets we are seeing this competitive intensity there?
Yeah, Tejas, I think intensity is there across where the manpower decline has happened a long time. I think that remains elevated across industry. As far as discounts are concerned, obviously, they have also increased, but they are now at similar level. There's no immediate reduction that you have seen as far as Q3 is concerned. Obviously, there have been some price adjustments which were announced by competition, a very marginal one, 2%-3%, but that I don't think is also aimed to obviously try to adjust some bit of discount. I think it's a slow I mean, direction suggests that at least. As of now, ending Q3, we have not seen any change in the intensity on all the front that you mentioned, whether it is influencer, whether it is dealer discounting, or investment in the manpower. That all continues as far as decorative is concerned.
Sir, the new entrant has also launched this EMI scheme, which has actually hit the dealer level as well. So we have picked up that. It is very much in execution as well. So just wanted to know your thoughts. Is it a tool that we'll like to use in future to recruit customers, or you believe that that doesn't move the needle and hence shouldn't be kind of triggered?
Well, I think the initial euphoria in terms of any new scheme will be there. But having seen the industry, I think it will be very difficult for this to sustain at a scale that it will demand. I think there are other players in similar industry who have tried setting up fund to finance, but I don't think it has gone anywhere. So I think we'll have to wait and watch, I think, how that progresses. But as of now, our belief is that it should not I mean, scaling will be a problem, but we'll wait and watch how things go.
Thanks, sir. That's all from my side.
Thanks, Tejas.
Thank you. The next question is from the line of Keyur Pandya from ICICI Prudential Life Insurance. Please go ahead.
Thank you. Two questions. So first, on the industry growth, I mean, looking at, say, overall growth for the listed players, it seems that as earlier participants highlighted, that core paint growth is either low or no growth. Now, are you able to assign any reason, or are you seeing any changing trend after, say, all the fiscal and monetary efforts from the government? So that is the first question. And second question, on your growth, so overall revenue growth in low single digit, at the same time, you are highlighting that industrial and automotive have done well. Does that mean that your decorative has degrown in value terms? And why I'm asking is that because Asian Paints JV. For auto and industrial, both are growing and, say, either in high single digit or double digit for the last two or three quarters, which suggests that they have gained share.
So which of these segments is, I mean, in which of these segments, decorative industry, are you losing share if so? So just clarification on that. Thank you.
So Keyur, I think it depends on what you look at. I think, as I mentioned earlier, as far as decorative is concerned, our volume and value gap is almost zero. That suggests that our focus on really selling quality or mix is very important for us. So there's other products which are, I would say, low-margin products like putty, and there are some other products which obviously, they are in the industry and which are getting pushed. We are trying to cautiously be away from that segment, and that is what is resulting into this. So it depends on how you look at market share. I think what we are really concerned about is our future, I would say, growth projections and maintaining profitability or improving profitability going forward. That will happen only if we try to invest in the quality of mix.
That is as far as decorative is concerned. On industrial, yes. Again, same thing. We are looking at premiumizing our portfolio and focusing on the profitability and investing systematically to build that. As a result, obviously, if we look at segmental-wise, there's no loss of share at all. All that might have happened is there is a segment which we are not representing. For example, marine. We are not there in the marine at all because of our global arrangement. We can't play in India. So that is how there are such segments where we don't play. Obviously, if there is a growth in that area, one can say that as an industry, there might be share realignment. As far as our segment plays concerned, there's no share loss at all.
And, sir, just first question of any green shoots on industry growth. So core paints seem to be either not growing or growing at very low single-digit. Are you seeing any green shoots? I mean, earlier we used to have so just core like-for-like products, what were there, say, five year, six years back? I mean, with no much large inflation or no large price cuts, there shouldn't be any value-volume mismatch for those category of products except for discounting. Now, they used to grow in, I'd say, high single-digit value terms or low double-digit in value terms as well as volume terms. Are you seeing any signs that industry is going back to those times or at least improving from where it is for the last, say, couple of years?
So Keyur, as far as movement from, let's say, quarter one to quarter two to quarter three is concerned, definitely in quarter three, after Diwali, November and December, we have seen changes happening in the demand pattern, and we have seen the recovery in core paint as well. So that is what you have seen, and we are hoping that that will continue in quarter four also in the core paint category, which is basically emulsion, enamel, and distemper, and whatever it is. So that is how it will continue. That is what we believe in. Going back to your question of whether we'll see and when we'll see that equal to GDP or more, I think that we are also really hoping that day should come soon.
But looking at the changes that are happening and our discretionary nature of our industry, painting cycles, all that is also contributing to this. But hopefully, there'll be some day into this because people I mean, ultimately, one has to paint their house, right? But I don't know which quarter, which year that will happen.
Understood, sir. So thanks a lot. All the best.
Thank you, Keyur.
Thank you. The next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead.
Yeah. Sir, one question on long-term industry growth rates. So if we look at compared to 2015, the efforts to drive the growth, that is, the entire ad spend done by all the four majors, the initiatives in distribution expansion, the trade spends, the new product launches, compared to that, we have seen there is a material increase in the efforts to drive the industry growth in terms of over the past 10 years. One, there are multiple numbers of new players who have entered. The ad spend in the industry, the new product launches, trade spends, everything has gone up. Now, despite that, the industry has kind of slowed down.
So is it fair to assume that probably the penetration level in India and the per capita consumption, etc., have reached a decent level, and here on the industry growth rates may structurally be lower the way we have seen it in the case of a lot of other industries like toothpastes or hair oil or even soaps or detergent, etc., where the penetration levels have gone up to a very high level? So expecting a very high growth in those industries sustainably is difficult. So do you think that stage has reached for the paint sector as well?
So Aniruddha, I don't think so that has reached because I mean, we are still about one-third of global average. And given the prosperity and all that is happening as far as index concerns and per capita income increasing, I'm sure our ability to spend more on the premium products will increase. So what I foresee is like this, that volume per se will actually change in I mean, in the mixed part will change. So all the products that we today call decorative, I think slowly and gradually, that will get shifted to pure play emulsion, which is what globally I mean, exists. They don't have so many categories. It's basically emulsion paint, which is called as a decorative paint. So that is likely to happen as we go forward, which essentially also means that my per kg price will increase.
I think that is where the growth in value term will start going forward. So as far as growth future is concerned, I think industry is pretty secured. I think there is a big runway available for this industry to grow. Probably that is one of the reasons why there are so many players who are interested in entering this industry because they see that there is a growth runway available, and there is a premiumness also possibility exists if things are executed well on the ground. Yeah.
Okay. Sure, sir. Understood. And sir, second and last question. Now, commodity prices are a bit lower. We have seen contrasting actions. Axo has cut prices, whereas Birla Opus has raised prices. So how do you see the pricing trend to emerge in the industry, and what will be concise actions on that? Yeah, that's it from my side. Thanks.
Aniruddha, so as far as prices are concerned, I think they're very stable. And as of now, I don't think there's any need to really substantially change the prices. That is what our view is, unless there are some different actions which are taken in the market. The price change that you've seen in the industry about Axo or Opus, Birla Opus, is not very significant. 2%, 3%, I don't think is going to really change much as far as industry is concerned. As such, Opus was lower by 5%. So they are correcting it, I guess. So I don't think it has any material change or impact that is going to be seen.
Okay. Sure, sir. Thanks.
Thank you.
Thank you. The next question is from the line of Ajay Thakur from Anand Rathi Securities. Please go ahead.
Hello.
Hi, Ajay.
Yeah. Thanks for taking my question. So I have two questions. One, I wanted to understand more on the trend that you indicated of volume-value gap, which has actually reduced for you. How has it been kind of narrowing over the last maybe few quarters, and what are your expectations going forward? Are you likely to kind of maintain this kind of flattened kind of volume-value gap, or do you expect this to gain inch up going ahead?
Yeah. So Ajay, our intent is to actually have it at the same level, which obviously means our quality of mix is better. Though while that is our endeavor, but obviously, quarter-on-quarter, it keeps changing because mix are very different. So I would say I don't recall now what are the Q1, Q2, but Q4 also, our intent is that only, to focus on the mix. But there might be slight change because of different mix profile compared to last year. So that might play out, but it won't be very large, as much as I can share. Yeah.
Understood. The second was you kind of did indicate about the recovery in the prior quarter, more in October, November, December, gradually. But can you just also throw some more light in terms of the sustainability of this recovery and also how you see in terms of cyclical recovery? Because there's a lot of talk happening in the industry about cyclical recovery of the paint sector. If you can throw some more light on that part, what is the confidence of this kind of growth sustaining or kind of accelerating going ahead?
Yeah. So I think as we entered quarter four, we have seen that sign of some recovery. So that gives us confidence that quarter four should also be better.
Understood. Is it likely to kind of improve from here on? Any sense on that or how stronger can we expect? Because still, if you look at the industry growth, it is still kind of subdued in that context.
Yeah. So that is right. Ajay, but what is happening if you look at total industry, which includes all the new players also, which figures are very difficult. Those are not available except top five. But I think as an industry, unorganized, organized, our sense is that industry still has grown. I think it is not that industry itself is degrowing. INR 70,000 crore-INR 80,000 crore industry would have certainly grown if not GDP, about GDP. But what happened is there are so many players who are coming in and putting in their bit in each state. Obviously, that is resulting into not knowing exactly a total impact on our quantify and reconcile impact on top four. I mean, that is what is happening. So as far as industry growth momentum is concerned, future is very secure. I think this is short term.
So I think resilience will be called for, and I think we are all trying to protect our own turf. I think given that situation, I'm sure things should turn out better. Hopefully, we'll reach that as an industry and as all players that are listed, we'll be able to show closer to GDP numbers once this settles.
We covered all the numbers. Understood. Sir, last question from my side was more on the backward integration. We have seen that large players are undertaking backward integration given the fact that that will help in terms of better margin for them. How do you perceive this given the fact that for players such as us, can it lead to further impact in terms of the competition because they might pass on this benefit in terms of the margin benefit to either customers or to the trade and thereby kind of trying to gain further on the margin side of it? So is that something how you perceive it, or how do you want to look at it in terms of going forward?
Do you also have certain plans in terms of executing some of these backward integration projects so that you also gain that edge in terms of the margins? Yeah. That's it from my side. Thank you.
So Ajay, backward integration is a strategy which has to support either your absolute niche play or scale. I think these are the two aspects. So as far as scale is concerned, right now, we evaluate based on that. So wherever we think that scale will support in terms of being more competitive, definitely, we invest. Likewise, we invested on as far as industry is concerned, we are completely backward integrated on all major categories because we lead there. And obviously, we introduce a lot of niche and high-end technologies for our customer. Obviously, we need that kind of backward integration to be competitive as well as to control quality and technology of that product. So that is as far as industry is concerned. In decorative also, we have backward integrated as far as emulsions are concerned. For the last 10 years-15 years, we are doing that.
And that, again, is not being used really to produce a commodity product. I think that is used to produce very niche, high-end, unique-to-category product that we introduce offering unique benefits. That kind of product, we try to make it there and try to use that in our product. So it depends on what strategy we are going to pursue. If I am going to put something in the economy segment using scale, and if I'm then trying to pass it onto market, I don't think I'll be able to improve my margin. Basically, I've reduced the price, and I've set off everything. That is what is likely to happen. So I don't know what is the aim. But as far as we are concerned, we evaluate this as our requirements.
Definitely, wherever need be, either to protect our competitiveness or to introduce high-end products and premiumization, we use and we decide on the backward integration investment.
Understood. Quite helpful. Thank you, sir.
Thank you.
Thank you. Anyone who wishes to ask a question, you may press star and one. To ask a question, you may press star and one now. We have a follow-up question from the line of Avi Mehta from Macquarie Capital. Please go ahead.
Yeah. Hi, sir. I just wanted to get some color on the intermittent businesses and Nerofix.
Yeah. So Nerofix is doing pretty well, growing at double-digit, higher double-digit, I would say. And that is also because of our play as far as retail is concerned as well as on the industrial side. They have increased their play on the segments. So that is going pretty well. On profitability also, they have improved significantly. And I think that's fantastic work that has happened as far as Nerofix is concerned. On Nepal, also continues to do very well. And I think that situation, slight disturbance was there. That is now passing. And I think things have started recovering. So overall, I think subsidiaries are also in pretty good shape, I would say.
For Bangladesh and Sri Lanka, anything to call out?
Bangladesh is still under stress. I don't think when frankly, every quarter, we try to assess the situation with this election around the corner. I don't know post-election what happens, but situation remains difficult as far as Bangladesh is concerned for us. As far as Sri Lanka is concerned, we exited that. So.
Oh, sorry.
Yeah.
Got it, sir. That's all.
Yeah. Right. Thank you, Avi.
Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments. Over to you, sir.
Yeah. Thank you so much for attending and showing interest in our company. I think our endeavor is to obviously maintain overall top-line growth as well as profitability guidance that is given. And we hope to see you in the month of May for our quarter four and year-end investor briefing. Thank you so much.
On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.