Detailed Narrative
Q3 FY26 Performance Overview
AkzoNobel India Limited reported a Q3 FY26 revenue of ₹907.7 crores, marking an approximate 1% decline year-on-year. However, the domestic business, excluding divestitures, demonstrated resilience with a growth of about 2%. The company achieved a blended volume growth of 6% across both decorative and industrial segments, with the decorative segment alone contributing an 8% volume increase. Gross margins saw a sequential improvement of 80 basis points, and PAT, excluding exceptional items📎, grew by approximately 5.9% year-on-year.
Impact of Divestitures and Like-for-Like Growth
The reported ~1% revenue decline in Q3 FY26 was primarily attributed to divestitures, including the powder coating entity and the International Research Centre business, as well as the cessation of certain exports like Dramatone and Acotone colorants. These strategic changes and discontinued operations had an estimated annual revenue impact of approximately ₹200 crores, or about ₹25 crores per quarter. On a comparable like-for-like basis, the decorative volume growth for the nine months ended December 2025 was between 1% and 2%.
Decorative Segment Revival and Premiumization Strategy
The decorative segment showed a strong recovery in Q3 FY26 with an 8% volume growth, notably driven by performance in the premium segment. The company is actively addressing its Mass Economy Primer (MEP) segment by enriching its premium primers and adopting a more strategic approach to compete effectively with new market entrants. This strategy aims to balance aggressive volume growth with the imperative of maintaining healthy margins, ensuring sustainable business expansion.
Competitive Landscape and Pricing Adjustments
The market is currently characterized by intense competitive activity, including significant discounting from new entrants, with some offering prices 12-18% lower than existing players. Historically, AkzoNobel India Limited found its products to be overpriced by 5-9% compared to market leaders, which contributed to volume erosion. To counter this, the company has implemented strategic pricing actions based on conjoint pricing analysis, expecting a temporary volume-value gap of 1-2% for the next couple of quarters as the market adjusts.
Post-Merger Integration and Strategic Vision
Following the merger, the company's strategic focus is on integrating the two entities and leveraging their combined strengths to achieve ambitious market share targets. The goal is to move from the current number four position to number two within 3-4 years, and eventually become the number one player in the coatings business. This involves a balanced approach to growth across all segments, ensuring premium brands grow in line with or outperform GDP, and maintaining a strong emphasis on continuous innovation and operational excellence.
Capital Allocation and Royalty Savings Redeployment
AkzoNobel India Limited has approximately ₹200-225 crores of free cash available on its balance sheet, which is earmarked for future growth initiatives and CAPEX. A significant financial development was the cessation of royalty payments related to decorative paints in June 2025, following the acquisition of the decorative IP. This translates to annual savings of ₹60-65 crores, which the management has committed to redeploying directly into growth initiatives to enhance market share and drive business expansion.