InvestorQ : How did Akzo Nobel India manage to report such good results for the Sep-20 quarter?
Riya Dwivedi made post

How did Akzo Nobel India manage to report such good results for the Sep-20 quarter?

shrinidhi Rajan answered.
9 months ago

Akzo Nobel India is one of India’s most reputed paints and coatings manufacturers. It reported an increase of 34.57% in net profit at Rs.66 crore for the second quarter ended Sep-20. This compares very favourably with the net profit of Rs.49.25 crore reported by the company in the Sep-19 quarter.

There was a slight dip in the revenues for the quarter. The top line sales were from operations were down 4.25% at Rs.607 crore during the quarter under, but that was more because the demand for these coatings and paints was just about picking up in the aftermath of the slowdown in the Jun-20 quarter.

In a way, even the management conceded that the profitability improvement for the quarter was led by transformation initiatives in the previous year. In additional, lower raw material costs and some select and targeted campaigns were also responsible for the improvement in profits.

One more thing that was evident in the numbers was that the growth was more pronounced in the rural and non-metro markets during the quarter. This has been the case with many FMCG companies. Demand in the metro cities remained muted but the festive season could provide some respite.

There are two big sectors that the company basically caters to. The first is the automobile sector and the second is the infrastructure, oil and gas and the power sector. These are the sectors that drive the industrial paints demand for Akzo Nobel.

In a nutshell, the revival in the automotive sector benefited the business model of Akzo Nobel in the form of higher demand. However, with demand from infrastructure, oil & gas and power segments still tepid, that remains the big challenge for Akzo Nobel in the coming few quarters.