Akzo Nobel — Q3 FY26 earnings call

Call held 3 Feb 2026

Management summary

Akzo Nobel India reported a resilient Q3 FY26 with a like-to-like revenue growth of nearly 2% and a blended volume growth of 6%, driven by strong decorative performance. The company successfully protected gross margins and achieved a 14.9% EBITDA before exceptional items. While navigating intense competitive pressures and aggressive pricing from new entrants, management is strategically reinvesting royalty savings into growth initiatives and focusing on a balanced approach to volume and value, with a positive outlook for Q4.

Highlights

  • Like-to-like revenue growth of close to 2% for the domestic business.

  • Blended volume growth of 6% across decorative and industrial segments, with decorative volumes growing at 8%.

  • Gross margins largely protected, showing a sequential improvement of 80 basis points.

  • EBITDA stood at 14.9% before exceptional items.

  • PAT grew by around 5.9% year-on-year, excluding exceptional items.

  • Royalty savings of ₹60-65 crores (annualized) from decorative IP acquisition will be redeployed for growth initiatives and market share expansion.

  • Free cash of ₹200-225 crores available for growth initiatives and CAPEX.

Concerns

  • Reported standalone revenue declined by approximately 1% to ₹907.7 crore, impacted by divestitures and carved-out businesses (approx. ₹200 crores total, ₹25 crores/quarter).

  • Previously overpriced by 5-9% in premium brands, which led to volume erosion.

  • Competitive intensity is expected to continue for 2-3 quarters, with new entrants offering prices 12-18% lower.

  • Challenge in the Mass Economy Primer (MEP) segment.

Key financials

2 periods

Headline

  • Reported Revenue
    ₹907.7 Cr
    YoY -1%
  • Like-to-like Revenue Growth
    2%
  • Blended Volume Growth
    6%
  • EBITDA Margin (pre-exceptional)
    14.9%
  • PAT Growth (ex-exceptional)
    5.9%

9M

  • Decorative Volume Growth (LFL)
    1%

What they filed

Q1 FY27: revenue down 3.0%, net profit down 12.1% against the same quarter last year.

₹ Cr · quarterly
Line itemQ2 FY25Q3 FY25Q4 FY25Q1 FY26Q2 FY26Q3 FY26Q4 FY26Q1 FY27
Revenue982 1,050 1,014 995 835 −15%894 −15%883 −13%965 −3%
EBITDA146 167 159 134 111 −24%136 −19%127 −20%115 −14%
Net profit98 109 108 91 1,683 +1617%74 −32%126 +17%80 −12%
How to read this

₹ crore, as filed. The percentage beside a figure is the change against the same quarter a year earlier — never the quarter before, which would make every seasonal business look like it collapses and booms each year.

Segment breakdown

  • Decorative
    8% Volume Growth
  • Industrial Coatings
    — Growth

Capital allocation

high confidence
  • M&A Decorative IP and Dulux brand Acquisition · Integrated

    Dulux brand is now owned by Akzo Nobel India Limited listed entity, enabling royalty savings and strategic growth.

    Royalty ceased, translating to ₹60-65 crores savings depending on revenue trajectory.

    As far as the royalty is concerned, there are two portions of royalty. One is pertaining to the decorative paints and second is pertaining to the industrial coatings. In the month of June 2025, we acquired the decorative IP, and the Dulux brand is now owned by Akzo Nobel India Limited listed entity. So, the royalty ceased to exist which translates to roughly around 60 crores to 65 crores depending on the revenue trajectory.
  • Liquidity Cash ₹200 Cr Free cash of ₹200-225 crores available for growth initiatives and CAPEX for the near future.
    Coming back to the cash position, ballpark is roughly around 200 to 225 crores of free cash is available in the balance sheet, which is earmarked for the growth initiatives and the CAPEX for the near future.

Guidance & targets

Market Share

  • Ranking in Indian paints market Market Share · in 3 to 4 years · Medium confidence Number two
    I mean, now as JSW Group in the paints business, I think we are already number four. I think Parth has given us a very clear intent and signal that we should get to number two in 3 to 4 years when we would want it even faster perhaps.

    — Rajiv Rajgopal

  • Ranking in Indian paints market Market Share · short to medium term · Medium confidence Number three and beyond
    The larger goalpost, as I mentioned to you, is we are clear number four now with the combination. There's no doubt on that. And the quick clarity is to say that how do we quickly move to number three and then beyond.

    — Rajiv Rajgopal

  • Ranking in Coatings business Market Share · short to medium term · Medium confidence Number two, then number one
    In coatings, I think we have now got all the recipes to start moving towards first being a number two and then a number one player.

    — Rajiv Rajgopal

Profitability

  • EBITDA Margin Profitability · near term · Medium confidence 14.5% to 15%
    But the range I would give you is between 14.5 to 15. And then to take it up to 15 to 16, but at this point of time, I would say around 15% is where really I want to keep the focus.

    — Rajiv Rajgopal

  • EBITDA Margin Profitability · medium term · Medium confidence 15% to 16%

    — Rajiv Rajgopal

Market context

  • Q4 Decorative Volume Growth Volume · Q4 FY26 · Low confidence Strong
    in my view, this quarter, unless there are again any external events or hopefully no climate change impacts but other than that, it should be a pretty strong quarter from a volume perspective. You are right, in Decoratives.

    — Rajiv Rajgopal

What to watch in Q4 FY26

Competitive intensity and pricing environment

Next quarter (Q4 FY26)
Current High, aggressive pricing by new entrants (12-18% lower), expected to continue for 2-3 quarters.
Target Signs of easing competitive pressure or stabilization of pricing.

Why it matters

Directly impacts volume growth, realization, and margins, crucial for the company's profitability and market share strategy.

I think it will still take 2-3 quarters for it to really play out because at this point, let's understand the math. You are talking of a new entrant which has come at prices which are anywhere up to 12% lower than the prices at which we operate in addition to that additional discounts

Risks & concerns

  • Competitive Intensity & Pricing Pressure

    high

    Aggressive pricing by new entrants (12-18% lower) and excessive discounting in the market is expected to continue for 2-3 quarters.

    Management acknowledged

  • Historical Overpricing & Volume Erosion

    medium

    Previously overpriced by 5-9% in premium brands, which led to volume erosion; actions are being taken to address this.

    Management acknowledged

  • Integration Challenges (Cultural & Operational)

    medium

    Integrating two different organizational cultures (MNC vs. Indian business house) and managing stakeholders post-acquisition is a key focus in the early stages.

    Management acknowledged

Q&A highlights

7 direct
Q4 demand outlook for decorative segment Direct
in my view, this quarter, unless there are again any external events or hopefully no climate change impacts but other than that, it should be a pretty strong quarter from a volume perspective. You are right, in Decoratives.

Management provides a positive outlook for Q4 decorative volumes, aligning with broader industry sentiment despite a muted October.

Asked by Abneesh Roy

Gap between volume growth and sales growth Direct
we were usually overpriced between 5% and 9% which is what had led to volume erosion. We have addressed some of those and we have also started looking at how do we really look at the whole franchise of the customer bases and where we need to play.

Explains the strategy of price adjustments to regain volume, indicating a short-term trade-off between value and volume to address historical overpricing.

Asked by Abneesh Roy

Competitive intensity from new players (Birla Opus) and its duration Direct
I think it will still take 2-3 quarters for it to really play out because at this point, let's understand the math. You are talking of a new entrant which has come at prices which are anywhere up to 12% lower than the prices at which we operate in addition to that additional discounts and then there was the 3 litre which while you say it's been called off, it's still there in a few markets, still running pretty much.

Management expects aggressive competitive intensity to persist for 2-3 more quarters due to new entrants' lower pricing, highlighting ongoing market challenges.

Asked by Abneesh Roy

Revenue synergies from JSW integration Partial
it's a little too early for me to talk, to be very honest, not for any other reason, because everything is in scope right now. And there are obviously certain elements of confidentiality that I am bound by.

Management acknowledges potential synergies but defers detailed discussion, suggesting ongoing strategic formulation and confidentiality constraints.

Asked by Manoj Menon

Integration aspects (people, culture) post-merger Direct
I think as in Indian customs the first thing you do is to make sure you come in and be a part of the family and that's what we are trying to do.

Highlights the focus on cultural integration, talent retention, and creating a unified team as crucial for the success of the JSW partnership.

Asked by Manoj Menon

Utilization of royalty savings (bottom line vs business expansion) Direct
the royalty ceased to exist which translates to roughly around 60 crores to 65 crores depending on the revenue trajectory. And that amount, as Rajiv alluded in the initial comments, we are committed to redeploy towards the growth initiatives and to gain the market shares.

Clarifies that royalty savings will be reinvested into growth and market share expansion, indicating a strategic use of funds rather than immediate profit boost.

Asked by Lakshminarayanan G

Potential change in distribution model (direct vs distributor) Direct
there will be a combination, and they will also continue to be our distributors. Our distributors will continue. That we will come back. We will take a couple of quarters to see what is the best model and we will come back to you.

Indicates a strategic review of the distribution model to optimize for growth, with a decision expected in a few quarters, potentially impacting reach and efficiency.

Asked by Pratik Gothi

Guardrails for scaling up (brand positioning, pricing power, channel economics) Direct
the guardrail would be to make sure that we are not dialling in into one area or one vector of growth. We are looking at playing it across the segments. That's one. And the same thing, both in decorative and in coatings, to make sure that we get a fairly secular growth across our businesses and making sure that it's not the lowest margin business that grows the highest and hence a high performing business are there.

Management emphasizes a balanced growth strategy across segments and product categories, avoiding over-reliance on low-margin segments to ensure sustainable, profitable growth.

Asked by Akshay Krishnan

3 min read 7 chapters

Detailed narrative

Q3 FY26 Performance Overview

Akzo Nobel India reported a standalone revenue of ₹907.7 crore for Q3 FY26, representing an approximate 1% decline. However, on a like-to-like basis, excluding carved-out businesses such as powder coating, IRC, and certain exports (which impacted revenue by approximately ₹200 crores annually or ₹25 crores per quarter), the domestic business grew by almost 2%. The company achieved a blended volume growth of 6% across decorative and industrial segments, with the decorative segment showing a strong 8% volume growth. Gross margins were largely protected, improving by 80 basis points sequentially, and EBITDA stood at 14.9% before exceptional items. Excluding exceptional items, PAT grew by approximately 5.9% year-on-year.

Strategic Shift & Pricing Adjustments

Management emphasized a strategic shift towards prioritizing volume and revenue growth, moving beyond a sole focus on margins. Internal analysis revealed that the company's premium brands were previously overpriced by 5-9%, contributing to volume erosion. To counter this, strategic pricing adjustments have been implemented, particularly in the premium segment, aiming to regain market share and drive volume growth without significant margin dilution. This approach is designed to be intelligent and strategic, not merely tactical discounting.

Competitive Landscape & Pricing Strategy

The market continues to be highly competitive, with new entrants like Birla Opus offering prices 12-18% lower than existing players, alongside additional discounts and specific pack sizes (e.g., 3-liter). This aggressive pricing environment is expected to persist for another 2-3 quarters. Akzo Nobel is focusing on enriching its premium primers and strategically competing in the Mass Economy Primer (MEP) segment. The company plans to leverage its product quality and scientific approach to maintain its position, acknowledging that pricing is a key lever but not the sole driver for growth.

JSW Integration & Synergies

Following the acquisition of the decorative IP in June 2025, the Dulux brand is now owned by Akzo Nobel India Limited, and the company is integrating with the JSW Group. Management expressed a clear intent to become a top player in the Indian paints market, aiming for the number two position within 3-4 years. While specific revenue synergies are still being evaluated due to confidentiality, potential areas include leveraging JSW's strong presence in southern markets and Akzo Nobel's strengths in other regions, as well as opportunities in industrial coatings. Cultural integration and talent retention are key focus areas for a successful merger.

Capital Allocation & Royalty Savings

The cessation of royalty payments for the decorative IP, now owned by the listed entity, is expected to result in annual savings of approximately ₹60-65 crores, depending on revenue trajectory. These savings are committed to be redeployed towards growth initiatives and market share expansion, rather than flowing directly to the bottom line. The company currently holds ₹200-225 crores in free cash, which is earmarked to fund future growth initiatives and CAPEX. For industrial coatings, Akzo Nobel will continue its technological partnership and royalty payments as per previous agreements.

Distribution Strategy

Akzo Nobel India currently operates with a strong distributor network, comprising 153 distributors, with over 82% having been partners for more than 10 years. While the distributor model has been effective since its implementation in 2013, management is now evaluating an optimal mix of direct and distributor models for certain markets. This strategic review aims to further invest in the brand and drive off-take, particularly when competing with larger players. A decision on the best model is expected within a couple of quarters.

Q4 Outlook & Market Demand

After a subdued October, influenced by rain and an early Diwali, demand for decorative paints rebounded significantly in November. Management anticipates Q4 FY26 to be a 'pretty strong quarter from a volume perspective' for the decorative segment, provided there are no unforeseen external events or climate impacts. This positive outlook aligns with broader industry expectations, suggesting a favorable demand environment for the upcoming quarter and continued recovery in consumer spending.

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