(Reuters) -Akzo Nobel India’s second-quarter adjusted profit fell on Thursday as weak retail demand and heavy monsoons dampened demand for its paints.
Consolidated net profit before exceptional items and tax fell 26% to 978 million rupees ($11.1 million) for the July-September quarter. Revenue decreased 15% to 8.35 billion rupees.
The company, which is home to the “Dulux” brand, recorded an exceptional capital gain of 18.74 billion rupees, tied to a divestment deal it executed with its Dutch parent Akzo Nobel NV.
Chairman Rajiv Rajgopal flagged a hit from weather conditions and competition, and said retail demand “remained under pressure” in the reported quarter.
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KEY CONTEXT
JSW Group’s June purchase of Akzo Nobel India has shifted investor focus to its ramp-up plan after years of the latter lagging Asian Paints, Kansai Nerolac and Berger Paints.
The turnaround faces headwinds as consumers opt for cheaper brands and heavy monsoon rains delay projects despite signs of firmer urban demand.
Kansai and Berger both reported lower profits citing heavy monsoon. Asian Paints will report earnings next week.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth (%) rating* analyst price yield
s target** (%)
Akzo Nobel India 30.84 19.85 6.30 8.23 Buy 2 0.84 3.09
Kansai Nerolac 27.34 16.76 6.66 20.18 Hold 11 0.90 1.01
Paints
Asian Paints 52.55 34.73 6.56 9.58 Hold 34 1.04 1.00
Berger Paints India 46.39 29.98 8.04 9.00 Hold 22 0.98 0.71
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JULY – SEPTEMBER STOCK PERFORMANCE
— All data from LSEG
— $1 = 87.8950 Indian rupees
(Reporting by Hritam Mukherjee in Bengaluru; Editing by Nivedita Bhattacharjee and Sahal Muhammed)
