Summary
Akzo Nobel India Limited - Q3 FY26 Earnings Call Summary Tuesday, February 03, 2026 4:00 PM
Event Participants
Executives 3 Krishna R (Whole-Time Director & CFO), Rajiv L. Jha (General Counsel & Company Secretary), Rajiv Rajgopal (Joint Managing Director & CEO)
Analysts 5 Abneesh Roy (Nuvama), Akshay Krishnan (ICICI Securities), Aniruddha Joshi (ICICI Securities), Lakshminarayanan Ganapathi (Tunga Investments), Mrunmayee Jogalekar (Asit C Mehta Investment Intermediates), Pratik Gothi (HSBC)
Financials & KPIs
| Metric | Reported | Commentary |
|---|---|---|
| Revenue from Operations | ₹907.7 crores | -1% YoY; Domestic business grew ~2% after adjusting for ₹200 crore annual revenue (₹25 crore/quarter) lost via divestitures and cessation of colorant exports. |
| Volume Growth (Blended) | 6% | Driven by an 8% volume growth in Decorative paints, partially offset by high base effects in Industrial coatings. |
| Decorative Volume Growth | 8% | Significant bounce back from a muted October; premium segment grew in nearly single digits. |
| Gross Margin | ~40% (Derived) | +80 bps QoQ sequential improvement; management successfully protected margins despite competitive intensity. |
| EBITDA Margin | 14.9% | Maintained double-digit profitability; royalty savings from Decorative IP acquisition were redeployed into growth initiatives. |
| PAT (Adjusted) | +5.9% YoY | Growth figure excludes exceptional items, primarily a significant provision related to new labor codes. |
| Cash Balance | ₹200-225 crores | Free cash available for growth initiatives and planned CAPEX. |
Geographic & Segment Commentary
- Decorative Paints: Achieved 8% volume growth despite a weak October due to rains and early Diwali; performance was led by the premium segment. Strategic focus is shifting to the “Mass Economy Primer” (MEP) segment to combat new entrants using value-based pricing and “science-based” price elasticity studies.
- Industrial Coatings: Performance was mixed with strong growth in Coil, Automotive, and Specialty coatings, offset by a decline in Marine/Protective due to high base effects from Indian Navy projects in the previous year. Segment strategy involves moving from a purely premium player to targeting the mid-market segment using Akzo’s technical expertise.
Company-Specific & Strategic Commentary
- JSW Group Integration: Following the acquisition, the company is proposing a name change to “JSW Dulux” to leverage JSW’s agility and Dulux’s premium brand equity. CEO Rajiv Rajgopal noted a shift from MNC-style margin focus to an Indian business “growth-first” mantra, aiming to move from the current #4 position to #2 within 3-4 years.
- Royalty Restructuring: Following the acquisition of Decorative IP in June 2025, the company saved approximately ₹60-65 crores in annual royalty payments. These funds are being systematically redeployed into brand building and market share acquisition.
- Distribution Model: Currently operating with 153 distributors (82% of whom are over 10 years old), management is evaluating a “hybrid” model. This may involve moving to direct distribution in specific markets where higher brand investment and offtake support are required to compete with lead players.
Guidance & Outlook
| Metric | Guidance / Outlook | Commentary |
|---|---|---|
| Q4 FY26 Volume | Strong Growth | Anticipated strong finish to the fiscal year in Decoratives, barring external climate events. |
| EBITDA Margins | 14.5% - 15.0% | Target band maintained even while investing in growth; aim to eventually scale to 15-16% through synergies. |
| Market Position | Top 2-3 | Long-term (3-4 year) target to become the #2 player in the Indian paint industry through combined JSW-Dulux efforts. |
Risks & Constraints
| Risk | Context |
|---|---|
| Competitive Intensity | New entrants (Birla Opus) are pricing 12-18% lower than incumbents; management expects this pressure to persist for 2-3 quarters. |
| Integration Challenges | Merging MNC and Indian business cultures; risk of talent attrition or channel conflict during the JSW-Akzo transition. |
| Margin Dilution | Expanding into the mid-market/economy segments and defending market share against aggressive discounting may lead to short-term margin erosion of ~50 bps. |
Q&A Highlights
Demand & Competition
- Question: How do you view the volume vs. value gap and competitive intensity from Birla Opus? (Abneesh Roy)
- Answer: The volume-value gap may stay at 1-2% for a few quarters due to strategic pricing adjustments. Competitive intensity remains high in mass/economy segments and waterproofing, but premium segments remain resilient due to product engineering and quality (Rajiv Rajgopal).
Synergies & Name Change
- Question: What are the expected revenue synergies and the strategy behind the name change? (Manoj Menon & Aniruddha Joshi)
- Answer: We are combining Dulux’s 10-15% market share in West/East India with JSW’s Southern strength. The name “JSW Dulux” captures both “power/strength” and “luxury.” The brand work is commencing to see how to best utilize both JSW and Dulux portfolios (Rajiv Rajgopal).
Financials & Royalty
- Question: How will the saved royalty be used? (Lakshminarayanan Ganapathi)
- Answer: The ₹60-65 crore savings from Decorative royalty is being fully redeployed into growth initiatives. We will continue paying royalty only for the Industrial segment where AkzoNobel remains the tech partner (Krishna R).
Key Takeaway
Akzo Nobel India reported a resilient Q3 FY26, characterized by an 8% volume growth in its Decorative segment and a sequential gross margin improvement of 80 bps. Despite a headline revenue decline of 1% due to divestitures and export cessations, the underlying domestic business grew by 2%. The company is undergoing a pivot under the JSW Group’s ownership, transitioning from a margin-centric MNC approach to an aggressive growth-oriented strategy aimed at reclaiming the #2 industry position. With ₹200-225 crores in free cash and ₹60-65 crores in annual royalty savings being pumped into brand building, management is focused on “firepower” and micro-market strategies. While competitive intensity from new entrants remains a risk to the mass-market share, the company intends to maintain 14.5-15% EBITDA margins through premium segment outperformance and operational efficiencies. Forward outlook remains buoyant for Q4 FY26 as the company integrates JSW’s distribution reach with the Dulux brand legacy.
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