Akzo Nobel India Ltd Colouring Lives

Akzo Nobel India Ltd manufactures and

markets wide range of coatings and
specialty chemicals. It is the 4th largest
paints company in India with an overall
market share of around 11%. The Company
operates through the following segments:
Performance Coatings, Decorative Paints
and Specialty Chemicals. The Performance
Coatings segment produces aerospace and
automotive; industrial; marine and protective; and powder coatings. The Decorative Paints
segment manufactures and supplies a variety of exterior and interior decoration and protection
products for professional and Do-It-Yourself (DIY) markets. The Specialty Chemicals segment
manufactures industrial, functional, pulp and performance chemicals.
Akzo Nobel India Ltd is one of the Multibagger Stocks, identified by Dynamic Research based
on technical and fundamental research.
Akzo Nobel India share price has touched a 52 week high of Rs. 1705 on 29 -Jul -2016 and a
52 week low of Rs.1205 on 12 -Feb -2016, and is currently trading at Rs. 1602.

Share Holding
The promoters holding in the company stood at 72.96%, while Institutions and Non-Institutions
held 10.48% and 16.56% respectively.

Financial Analysis
Quarterly Results
For the quarter ended June 2016, the total income from operations of Akzo Nobel India Ltdhas
reported a growth of 6.83% on Y-o-Y basis to Rs. 703.39 cr as against Rs. 658.40 cr during
the same quarter last year. A boost up in total income from operations shows strong
development in business.

www.dynamiclevels.com

Page 1

The operating profit of Akzo Nobel on standalone has shown a growth of 39.67% Y-o-Y to Rs.
84.64 cr as against Rs. 60.60 cr during the same quarter last year; this is mainly due to higher
net sales.
The net profit of Akzo Nobel has registered a growth of 41.82% Y-o-Y to Rs.64.26 cr as
against Rs 45.31cr during the same quarter previous year.
The earnings per share of the company have showed a growth of 41.81% Y-o-Y to Rs. 13.77
as against Rs. 9.71 during same period last year.
The financial performance for this quarter has been positive and the company is
growing consistently despite tough market conditions.

Annual Results
For the year ended March 31, 2016 Akzo Nobel India Ltdon Standalone basis reported net
sales of Rs. 2740.14 cr compared to Rs. 2526.99 cr FY2015.
For the year ended March 31, 2016 Akzo Nobel India Ltdon Standalone basis reported net
profit of Rs. 202.10 cr compared to profit of Rs. 186.31 cr FY2015.

Ratio Analysis
Name

Ratio

Current Ratio

0.78

Quick Ratio

0.5

Dividend Yield%

4.35

Interest Coverage Ratio

45.37

Debt Equity Ratio

Return On Asset (%)

23.5

Return On Equity (%)

30.42

www.dynamiclevels.com

Page 2

The above ratio suggests that the company is operating with zero debt. Higher Interest
Coverage Ratio implies that company can very easily pay interest on outstanding debt. The
management is efficiently using its assets to generate earnings. The Company is generating
very good returns with the money the share holders have invested;

Investment Rationale

Indian paints industry is estimated at Rs.406 Bn, out of which organized sector
accounts for ~65% (~Rs.264 Bn) of the total market.

The Indian paints market has substantially grown and caught the attention of many
international players

Akzo Nobel manufactures and markets wide variety of coatings under brand name of
Dulux holding second position in finest paints category with around 20% market share
in premium segment.

Presently, the growth of the Indian paints industry is being witnessed in Tier-II and TierIII cities as compared to urban cities. The growing popularity of quality paints and rising
income levels of people residing in Tier-II and Tier-III cities have pushed the growth in
premium paints market of Indian decorative paints industry.

Decorative industry size is expected to double to around Rs.460 Bn by year 2020

driven by demand from urbanization and revival in realty industry.

Akzo Nobel is one of the largest beneficiaries of fall in global crude oil prices as crudelinked raw material forms around 35% of the total raw material cost including
packaging.

With good monsoon rains and impending festive season, the company expects a good
offtake in the coming months.

The Board of Directors has approved, setting up a Powder Coating manufacturing

facility in Mumbai, with an installed capacity of 7000 tons.

Investment Opinion
At CMP of Rs. 1607 the stock is trading at a P/E of 33.80, the market cap of the company
is 7475.92 crore. As per Dynamic Levels we recommend a buy on Akzo Nobel at CMP
1602 levels with a price target of Rs. 1750.

www.dynamiclevels.com

Page 3

Disclaimer

The investment advice or guidance provided by way of recommendations, reports or other ways
are solely the personal views of the research team. Users are advised to use the data for the
purpose of information and rely on their own judgment while making investment decision.
Dynamic Equities Pvt. Ltd - SEBI Investment Advisory Reg. No.: INA300002022
Disclosure
Dynamic Equities Pvt. Ltd. is a member of NSE, BSE, MCX SX and a DP with NSDL & CDSL. It is also
engaged in Investment Advisory Services and Portfolio Management Services. Dynamic
Commodities Pvt. Ltd., associate company, is a member of MCX & NCDEX. We declare that our
activities were neither suspended nor we have defaulted with any stock exchange authority with
whom we are registered. SEBI, Exchanges and Depositories have conducted the routine inspection
and based on their observations have issued advise letters or levied minor penalty on for certain
operational deviations.
Answers to the Best of our knowledge and belief of Dynamic/ its Associates/ Research Analyst:
DYNAMIC/its Associates/ Research Analyst/ his Relative:

Do not have any financial interest / any actual/beneficial ownership in the subject
company.

Do not have any other material conflict of interest at the time of publication of the
research report

Have not received any compensation from the subject company in the past twelve months

Have not managed or co-managed public offering of securities for the subject company.

Have not received any compensation for brokerage services or any products / services or
any compensation or other benefits from the subject company, nor engaged in market
making activity for the subject company

Have not served as an officer, director or employee of the subject company

www.dynamiclevels.com

Page 4