Dulux paint maker Akzo Nobel India stock hits new high; zooms 19%

On October 4, Akzo Nobel India received communication from Akzo Nobel NV that AkzoNobel for a portfolio review with initial focus on Deco South Asia.

Shares of Dulux paint maker Akzo Nobel India hit a new high of Rs 4,649, zooming 19 per cent on the BSE in Wednesday’s intra-day trade. In the past two trading sessions, the stock of paint company has surged 22 per cent. Thus far in the calendar year 2024, it soared 75 per cent, as compared to 13 per cent rise in the BSE Sensex.

At 03:10 pm; the stock was trading 12 per cent higher at Rs 4,388.80, as against 0.25 per cent decline in the benchmark index.

Akzo Nobel India is engaged in the business of manufacturing, trading and selling of paints and related products. The company also provides research and development services to its holding company i.e. Akzo Nobel NV and other group companies.

 

The company’s wide range of sustainability driven innovations across paint products (Decorative and Coatings) brought alive by the strength of its iconic global brands, including Dulux, International, Sikkens and Interpon.

As on June 30, 2024, the promoters Imperial Chemicals Industries (50.46 per cent) and Akzo Nobel Coatings International B.V (24.30 per cent) collectively held 74.76 per cent stake in Akzo Nobel India. Asian Paints held 4.42 per cent stake in the company under bodies corporate category, the shareholding pattern data shows.

On October 4, Akzo Nobel India said the company received communication from Akzo Nobel NV (the Ultimate Holding Company of Akzo Nobel India) that AkzoNobel to begin a portfolio review with initial focus on Deco South Asia.

AkzoNobel is conducting a strategic review of its portfolio in order to redeploy capital towards growing its core coatings businesses.

The initial focus will be on its decorative paints positions in South Asia. AkzoNobel has a premium, highly profitable position in India in particular, with a strong track record of growth. Given this unique market position, the company is well-placed to participate in the further development of the highly dynamic South Asian decorative paints market, which is ripe for consolidation, the company said. 

The review will explore various strategic options ranging from partnerships or joint ventures through to mergers or divestments, it added.

With India becoming the regional headquarters of the new ‘South Asia’ organization structure in decorative paints within AkzoNobel Group, the focus of AkzoNobel to grow in this key market is evident, the company said.

Driven by new investments and sustained demand from both industrial segments and end-users, the Indian Paints and Coatings industry continues to register vibrant growth, said Akzo Nobel India.

Increased government focus on affordable housing and infrastructure development, robust real estate demand, higher percapita incomes driving new demand and shortened re-painting cycle and rise of new consumers in tier 3 and beyond geographies are some of the key reasons why the sectoral growth outlook continues to be robust, the company said in its FY24 annual report.

Meanwhile, in June 2024 quarter (Q1FY25), Akzo Nobel India had reported double digit volume growth even in a muted market. Innovative products and disciplined execution leading to growth ahead of industry, the company said.

According to Elara Capital’s analysis of revenue trends from major paint companies over the past two years highlights a market share decline for the industry leader, Asian Paints.

The brokerage firm attributes the recent market share loss of the industry leader Asian Paints to two main factors: 1) limited scope for adding new dealers following their aggressive expansion during FY19-22, and 2) the rising acceptance of a new entrant, particularly among smaller dealers focused on higher margin, which has affected the leader’s share of incremental growth.