Akzo Nobel

The overarching theme of the call was the company's strategic shift towards aggressive growth and market share gains, a clear directive from the incoming owner, the JSW Group. Management has already initiated this by taking cumulative price corrections of 1.5% to 2% to become more competitive, particularly in premium segments where they were operating at a 7% to 9% premium. This move is a departure from a more margin-focused approach and signals a clear intent to challenge market leaders more forcefully. The management team expressed high energy and enthusiasm for this new phase, viewing it as an opportunity to 'play in the market the way that you should play'.

On a comparable basis (excluding the divested businesses), Akzo Nobel's revenue declined 1.5% YoY to ₹834.9 crores. However, a key positive was the return to 3% overall volume growth, indicating a demand recovery. The performance was bifurcated: the premium Decorative paints segment grew at a healthy mid-single-digit rate, while the mass market segment declined. In the Coatings business, while volume and revenue grew, the mix was unfavorable, with lower-margin industrial coatings outperforming the high-margin automotive and specialty coatings.

Despite a 1.6% dilution in gross margin to 41.3% due to product mix and some raw material inflation, the company maintained a stable EBIT margin of 11.1%. This was attributed to disciplined cost management. Looking ahead, management provided a strong, sustained EBITDA margin guidance of 14% to 16%. This confidence is partly supported by the cessation of royalty payments for the Decorative IP, effective July 1, 2025, which provides a structural cost benefit.

The quarter was the first to reflect the slump sale of the Powder Coatings business and the International Research Center to AkzoNobel NV, which was completed on July 1, 2025. Management proactively provided restated, unaudited numbers for the previous year to allow for a like-for-like comparison. This transparency is crucial for investors to accurately assess the performance of the continuing business. The royalty for the Decorative business has ceased, but will continue for the Industrial Coatings portfolio.

Management noted that demand was impacted by prolonged and unexpected rainfall in September and October. However, they are optimistic about a sharp improvement in the coming months, driven by the onset of the repainting cycle, which typically follows a 3-5 year pattern from the post-COVID surge in 2021-22. This confidence translated into a specific and bullish forecast for Q3 FY26, with expectations of double-digit volume growth and high single-digit revenue growth.