Akzo Nobel India Limited , a leading paints and coatings company and maker of Dulux Paints, has announced its financial results for the second quarter and first half of the fiscal year 2025-26, revealing a significant surge in net profit driven by exceptional items.

Q2 FY2025-26 Highlights

The company reported a remarkable increase in net profit for Q2 FY2025-26, reaching ₹1,682.7 crore, up from ₹97.9 crore in the same quarter last year. This substantial growth is primarily attributed to exceptional items amounting to ₹1,874.2 crore, which includes profits from the sale of its Powder Coatings business division and International Research Center division.

However, the company faced challenges in its core operations:

• Revenue from operations decreased by 15.0% to ₹834.9 crore, compared to ₹982.3 crore in Q2 FY2024-25.
• EBIT (Earnings Before Interest and Taxes) from operations declined by 25.7% to ₹92.3 crore, down from ₹124.2 crore in the corresponding quarter of the previous year.

H1 FY2025-26 Performance

For the first half of FY2025-26, Akzo Nobel India reported:

• A 9.3% decrease in revenue from operations, totaling ₹1,830.0 crore, compared to ₹2,018.6 crore in H1 FY2024-25.
• EBIT from operations fell by 23.1% to ₹208.5 crore, down from ₹271.3 crore in the same period last year.
• Net profit, including exceptional items, rose significantly to ₹1,773.7 crore, a 734.5% increase from ₹212.5 crore in H1 FY2024-25.

Performance Excluding Divested Business

Excluding the divested Powder Coatings and IRC businesses, the company's results for Q2 FY2025-26 were as follows:

Management Commentary

Rajiv Rajgopal, Chairman and Managing Director of Akzo Nobel India Limited, commented on the results: "In Q2 FY2025-26, volume growth partially countered the impact of weather disruptions and competitive pressure on our topline. B2B vertical growth was led by industrial coatings and demand across mining, power and automotive sectors. Although retail remained under pressure, premium product portfolio witnessed a renewed uptick in demand."

He added, "Margins were constricted by vertical mix dynamics; however, disciplined operational cost control safeguarded our profitability. Navigating a challenging operating environment in H1 FY2025-26, the Company sustained its double-digit profitability while investing in brand, innovations and growth initiatives."

Recent Highlights

• The company celebrated five years of Dulux Assurance with the 'Lage Shaandaar, Chale Shaandaar' campaign.
• In decorative paints, Akzo Nobel India launched two flagship mass-market brand renovations:
  • Dulux Promise range of interior and exterior emulsions was upgraded with Colour Lock technology and superior wipe-ability for interiors.
  • Dulux Weathershield Projects was re-introduced at a more competitive price point in the entry-level exterior emulsion segment.
• The company expanded its Interdur range of anti-corrosive protective coatings with the launch of Interdur 1133 and Interdur 1135.

Despite facing challenges in its core operations, Akzo Nobel India's exceptional items have significantly boosted its financial performance for the quarter and half-year. The company continues to focus on innovation and brand initiatives while navigating a competitive market environment.

JSW Paints Limited, in a significant corporate maneuver, has announced an open offer to acquire up to 26% of the voting share capital of Akzo Nobel India Limited. This move, made in concert with JTPM Metal Traders Limited and JSW EduInfra Private Limited, signals a potential shift in the Indian paints industry landscape.

Offer Details

The open offer targets the acquisition of up to 1,18,40,482 equity shares, representing 26% of Akzo Nobel India's voting share capital. Key details of the offer include:

Independent Directors' Recommendation

The Independent Directors Committee (IDC) of Akzo Nobel India has played a crucial role in this process:

• The IDC approved its recommendation on October 15
• The recommendation was published on October 17
• Publication mediums included Financial Express, Jansatta, Dainik Statesman, and Navshakti

IDC's Assessment

The IDC, after reviewing the offer documents, has concluded that the offer price of ₹3,231.77 per equity share is fair and reasonable. This assessment is based on:

1. The offer price being in line with SEBI (Substantial Acquisition of Shares and Takeover) Regulations, 2011
2. Comparison with recent market prices:
   • NSE closing price on October 15: ₹3,392.30
   • BSE closing price on October 15: ₹3,385.30

Implications for Shareholders

The IDC has advised shareholders to independently evaluate the offer, considering factors such as:

1. The offer price
2. Current market performance of Akzo Nobel India's shares
3. Individual investment objectives

Shareholders are encouraged to seek independent financial advice before making a decision.

Market Context

This open offer comes at a time when the Indian paints industry is witnessing increased competition and consolidation. JSW Paints' move to acquire a significant stake in Akzo Nobel India could potentially reshape market dynamics and competitive positioning within the sector.

Next Steps

Shareholders of Akzo Nobel India will now have the opportunity to tender their shares in response to this open offer. The outcome of this offer could have significant implications for both companies and the broader paints industry in India.

As the situation develops, market observers will be keenly watching for any regulatory approvals required and the response from Akzo Nobel India's current management and major shareholders.