(Reuters) -Paint maker Akzo Nobel India reported a flat fourth-quarter profit on Wednesday, due to weak demand and rising costs.
The “Dulux” paint maker’s consolidated net profit fell 0.3% to 1.08 billion rupees ($12.6 million) in the quarter ended March 31.
The firm, a unit of the Netherlands’ Akzo Nobel, said its revenue from operations rose 5% to 10.22 billion rupees.
A 5.2% surge in raw material costs pushed its total expenses up by 6% to 8.87 billion rupees.
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KEY CONTEXT
Indian paint makers face sluggish retail demand as consumers opt for cheaper alternatives amid heightened competition triggered by Grasim Industries’ entry.
Analysts had predicted that higher operating and marketing costs would limit margin growth in the fourth quarter.
However, analysts at Anand Rathi had hoped that the reported quarter would reflect the benefit of the 2%-3% price hike toward the end of the second quarter.
Market leader Asian Paints missed profit estimates and warned of the worst demand in decades, with little hope for near-term recovery.
Kansai Nerolac posted an unexpected decline in fourth-quarter profit as higher expenses overshadowed “better-than-the-market” automotive demand.
Berger Paints beat quarterly earnings estimates earlier in the day, with strong industrial demand cushioning retail weakness. Grasim Industries will report their results next week.
PEER COMPARISON
Valuation (next 12 Estimates (next 12 Analysts’ sentiment
months) months)
RIC PE EV/EBITDA Revenue Profit Mean No. of Stock to Div
growth (%) growth (%) rating* analyst price yield
s target** (%)
Akzo Nobel India 33.56 21.22 8.75 11.10 Buy 2 0.89 3.19
Asian Paints 48.66 33.21 5.08 8.09 Sell 33 1.01 1.05
Kansai Nerolac 28.84 17.61 7.63 34.61 Hold 12 0.92 0.96
Paints
Berger Paints India 49.76 31.12 8.54 8.79 Hold 20 1.09 0.65
* The mean of analyst ratings standardised to a scale of Strong Buy, Buy, Hold, Sell, and Strong Sell
** The ratio of the stock’s last close to analysts’ mean price target; a ratio above 1 means the stock is trading above the PT
JANUARY-MARCH STOCK PERFORMANCE
— All data from LSEG
— $1 = 85.4140 Indian rupees
(Reporting by Anuran Sadhu in Bengaluru; Editing by Sumana Nandy and Shailesh Kuber)
