JSW Dulux Ltd. share price target

A potential sale of the Company’s Powder Coatings business and its International Research Centre (R&D operations) to a separate indirect wholly owned subsidiary of the parent. Potential acquisition of Decorative Paints Intellectual Property/ies (owned by the parent) by Akzo Nobel India.

Akzo’s reported Q2FY24 was largely in line with peers with a) low-single-digit revenue growth due to erratic monsoon and shift of pre-Diwali sales to Q3FY24 and b) >300bps EBITDA margin expansion led by lower commodity prices. We reckon it continues to gain value market shares in Paints.

While Akzo reported strong Q1FY24 led by strong growth across segments, we are enthused by board recommendation to re-appointment Mr. Rajiv Rajgopal as MD for five years. Rajiv had turned around Akzo Nobel India and initiated multiple investments such as increase in distribution and portfolio expansion.

Covid and RM inflation forced Akzo to cut down its ad-spend by ~200bps over FY21 23. However, with correction in commodity prices, Akzo plans to expand its ad-spend to-sales from ~1.7% in FY22-23 to ~3.5% over FY24-25. We believe it will allow Akzo to support its premium portfolio and accelerate market share gains.

Akzo Nobel reported market share gains for 5th consecutive quarter due to sustained efforts in distribution expansion, new product launches and good execution. Furthermore, we are enthused that it was also able to achieve this profitably - EBITDA margin expanded (50bps) whereas peers like Kansai and Berger reported EBITDA margin decline of 102bps and 239bps, respectively.

Britannia’s volumes +5%, price+mix +17%, revenues +22% - all surprised consensus positively. We believe amidst a not-so-buoyant demand backdrop, it continues to drive (1) market shares gains (15-year high) in weak markets and (2) distribution expansion (rural markets).

Akzo’s revenue growth (49.7%) was higher than peers like Kansai (46.2%) and Indigo (43.6%) and it has likely gained market shares in decorative paints for third consecutive quarter.

Stable performance in both the key segments of decorative and industrial paints over many quarters, renewed aggression under a new management, favourable macro environment, reduction in GST and raw material price inflation would be the highlights of the performance for Akzo in near term. For Akzo, we estimate 11% volume CAGR over FY18 FY20E with stable margins and ROE of ~23% and ROCE of ~21.9% for FY20E. Maintain BUY with...

Sales (excluding GST) was reported at Rs 7.16 bn (2.2% QoQ and +0.1% YoY) despite complete demerger of its speciality chemical business (effective 1st April 2018) which was contributing almost 10% of the revenues/PAT. Strong volume growth has helped the company report EBIDTA of Rs 725mn with Ebidta margin of 10.1% (+10bps QoQ and +80 bps YoY) despite inflation in raw material cost .Consequently PAT was reported at Rs 435 mn (-5.6% QoQ and +5.3YoY). We interpret the performance as strong, especially when we consider complete sale of the speciality business division....

Akzo Nobel India Ltd. (previously known as ICI India) is a leading paints and coatings company. The company's origin goes way back in 1926 when Brunner Mond & Co, one of the four companies was combined to form ICI in UK. This company operated as a trading office in Calcutta to sell alkalis and dyes. Presently it is engaged in manufacturing and marketing of paints, speciality chemicals and adhesives and ranked as a leader in sustainability. The Company has six production facilities, two state-of-the-art research laboratories and 50 warehouses across India along with 15,000+ customer service points. The Company owns two paint brands such as Dulux and Duco. For exterior emulsion they have created brands like Weathershield and Supercote. It has created retail brands like Dulux Velvet Touch, Acrylic Emulsion and Gloss. The company manufactures wide range of decorative paints and is also in the business activities of Coatings....

Akzo Nobel NV, the world's largest paint company, operates in India through its subsidiary Akzo Nobel India (Akzo) operating primarily in the decorative paint segment through its well-known brand Dulux and in the area of performance coating and specialty chemicals. Akzo in India enjoys ~ 9% market share in decorative paints in India serviced through its network of 9,000 plus dealers and 90 depots and six manufacturing facilities. We expect the company to report ~ 14.5% earnings CAGR over FY18-20E driven by ~ 9% revenue CAGR and improving margins. Strong growth in volumes should...

Akzo Nobel India is the 4th largest player in Indian Paints industry. It manufactures and markets a wide range of coatings and specialty chemicals. Akzo has plants at Bangalore, Hyderabad...

Akzo Nobel India Ltd (Akzo) is one of the leading paint manufacturers in India under the brand name Dulux'. Akzo has ~11% share by revenue among the top 5 players. It manufactures and markets a wide range of coatings (contributes ~90%) and specialty chemicals & others (~10%). Akzo has six manufacturing facilities in Hyderabad, Bengal..

Buy Akzo Nobel India Ltd CMP at Rs. 1437 add on dips to band Rs. 1265 - Rs. 1323 for the Sequential Targets of Rs. 1584, Rs. 1668

Gaining market share in mid-tier segment: Dutch paints maker's Indian arm, Akzo Nobel India Ltd. (ANIL) manufactures and markets wide range of coatings under brand name of Dulux holding second position in premium paints category with ~ 20% market share in premium segment and overall market share of ~ 11%. We expect ANIL to retain its position in premium segment and gain market share in mid-tier segment through new product launches and expansion in distribution network.

Akzo Nobel India is present in India for over 100 years and is a significant player in the paints industry. Over the years, the company witnessed sustained expansion, growth and...

Akzo Nobel India is present in India for over 100 years and is a significant player in the paints industry. Over the years, the company witnessed sustained expansion, growth and...

Akzo Nobel India (ANI), previously known as ICI India, is the world's largest paints and coatings company, and it is also a major producer of specialty chemicals. It caters industries and...