🧠 1. At a Glance
Akzo Nobel India — maker of Dulux Paints and OG Dutch MNC — just got scooped up by JSW Paints via a ₹13,332 Cr open offer. While the stock trades at a shiny ₹3,685 (vs open offer price of ₹3,417), fundamentals are rock solid: ROCE 42%, zero debt, and 106% dividend payout. But slow revenue growth (9% in 5 years) is the stain no primer can hide. Will JSW bring the fresh coat of growth?
🎬 2. Introduction with Hook
What happens when your neighborhood paint shop suddenly becomes the center of a corporate custody battle?
Answer: Akzo Nobel India Ltd, an MNC with impeccable financials but growth so slow even Berger Paints overtook it in a spray.
Now, JSW Paints is buying out the Dutch parent’s entire 74.76% stake and has triggered a juicy ₹3,417.77 open offer. Market price? ₹3,685. So why are investors paying more than the offer? 🤨
Because Akzo may be boring, but it’s profitable AF. And now, with JSW’s aggressive DNA, this might just become the Asian Paints it never was.
🏭 3. WTF Do They Even Do? (Business Model)
- Akzo makes and sells decorative paints, industrial coatings, wood finishes, and specialty chemicals.
- Flagship brand? Dulux Paints, known for its “Let’s Colour” campaigns.
- They operate across B2C (retail paint market) and B2B (protective coatings for marine, automotive, power infra).
- They also provide R&D services to group companies globally — royalty + service revenue = recurring cash.
So, you’re not just buying paint — you’re buying a cash-rich MNC with legacy clients and steady repeat demand.
📈 4. Financials Overview – Profit, Margins, ROE, Growth
Metric | FY21 | FY22 | FY23 | FY24 | FY25 |
---|---|---|---|---|---|
Revenue (₹ Cr) | 2,421 | 3,149 | 3,802 | 3,962 | 4,091 |
Net Profit (₹ Cr) | 208 | 290 | 335 | 427 | 429 |
OPM % | 14% | 14% | 14% | 16% | 16% |
ROE | 22% | 28% | 35% | 42% | 32% |
ROCE | 22% | 28% | 35% | 42% | 41.7% |
EPS (₹) | 45.6 | 63.7 | 73.6 | 93.7 | 94.1 |
🔥 Highlights:
- Revenue CAGR (5Y): ~9% – that’s like watching paint dry.
- Profit CAGR (5Y): ~13% – much better, thanks to margin expansion.
- Dividend payout: 91.5% avg. — Akzo doesn’t hoard, it shares 💸
💸 5. Valuation – Is It Cheap, Meh, or Crack?
- CMP: ₹3,685
- P/E: 39.2
- Price / Book: 12.6
- Dividend Yield: 2.71%
- Historical P/E Avg: ~30–35x
📌 Verdict: “Meh with a touch of froth”
At 39x earnings, you’re paying a premium for capital efficiency + dividend consistency. But growth? Not quite Asian Paints level.
📊 FV Range Calculation:
Let’s use FY25 EPS = ₹94.1
Fair PE range = 28x (slow growth) to 36x (post-JSW optimism)
👉 Fair Value Range = ₹2,635 to ₹3,388
🔔 So yes, CMP is above the FV range — inflated by the open offer drama.
🍲 6. What’s Cooking – News, Triggers, Drama
🧾 The Paint Soap Opera:
- JSW Paints to acquire 74.76% stake at ₹2,762.05/share (SPA)
- Open offer price: ₹3,417.77/share (to public)
- Total Deal Value: ₹13,332 Cr
- Akzo’s Powder Coatings + R&D biz already being sold for ₹3,295 Cr internally
- GST notices galore — Karnataka, Odisha, Bengal… Akzo’s tax paint is peeling
🎯 Big trigger: Can JSW turbocharge Akzo’s B2C reach and distribution? If yes, this becomes Berger 2.0.
🏦 7. Balance Sheet – How Much Debt, How Many Dreams?
Metric | FY25 |
---|---|
Debt | ₹62 Cr (negligible) |
Cash & Investments | ~₹2,300 Cr |
Equity | ₹46 Cr |
Reserves | ₹1,283 Cr |
💡 Debt-free + cash-rich = ready for inorganic growth or fat dividends.
Akzo is the rare MNC that doesn’t use debt like primer.
💰 8. Cash Flow – Sab Number Game Hai
- FY25 CFO: ₹311 Cr
- FCF: Positive
- Capex: Controlled (₹67 Cr CWIP)
- CFI & CFF show net cash outflows due to dividends and rights issue
🔁 Repeat after us: Dividends > Acquisitions for Akzo
JSW may reverse that with an India-first expansion push.
📊 9. Ratios – Sexy or Stressy?
Ratio | Value |
---|---|
ROCE | 41.7% ✅ |
ROE | 32.2% ✅ |
OPM | 16% ✅ |
Inventory Days | 95 |
Debtor Days | 52 |
Cash Conversion | -3 (efficient!) |
📈 Operational efficiency = tight.
But sales growth is meh. If JSW brings volume growth, these ratios could become sexy and scalable.
💸 10. P&L Breakdown – Show Me the Money
- FY25 Revenue: ₹4,091 Cr
- FY25 PAT: ₹429 Cr
- FY25 EBITDA: ₹642 Cr
- FY25 EPS: ₹94.1
- Dividend Payout: 106% (!)
Akzo doesn’t reinvest like Indian peers. It pays out.
Post-acquisition, expect that to change if JSW wants scale > stability.
🤼 11. Peer Comparison – Who Else Is in the Game?
Company | ROCE | OPM | P/E | FY25 PAT | Dividend Yield |
---|---|---|---|---|---|
Asian Paints | 25.7% | 17.7% | 60.7 | ₹3,925 Cr | 1.0% |
Berger Paints | 25.1% | 16.1% | 57.5 | ₹1,180 Cr | 0.6% |
Akzo Nobel | 41.7% | 16.0% | 39.2 | ₹429 Cr | 2.71% |
Indigo Paints | 19.5% | 18.1% | 39.7 | ₹144 Cr | 0.3% |
Kansai Nerolac | 13.0% | 12.0% | 34.2 | ₹591 Cr | 1.0% |
📌 Takeaway:
- Akzo wins on ROCE + yield, loses on growth
- Asian Paints still miles ahead on valuation and brand
- Berger & Indigo are rising stars; JSW-Akzo combo could finally challenge them
🧾 12. Misc – Promoters, Shareholding, Other Gyaan
- Promoter stake: 74.76% (being sold to JSW)
- FII holding: 3.68%
- DII holding: 8.49%
- Public float: 13.08%
- Shareholders: ~48,140
🕵️♂️ What changes post-deal?
- JSW becomes the new promoter
- Expect strategy revamp, rebranding, maybe even synergy with JSW Steel & infra biz
🧑⚖️ 13. EduInvesting Verdict™
Akzo Nobel India is not a growth stock. It’s a dividend ATM with Dutch discipline, now getting a desi makeover from JSW.
The market’s current price > open offer suggests investors expect JSW to unlock value. But even with all that ROE, the revenue still needs a jetpack.
FV Range: ₹2,635 to ₹3,388
CMP: ₹3,685 = Open offer euphoria built-in
🎭 Final Word:
JSW has the brush. Akzo is the canvas. What they paint next… could be either masterpiece or misstep.
✍️ Written by Prashant | 📅 9 July 2025
Tags: Akzo Nobel India, JSW Paints, Dulux, Open Offer, Paint Stocks, ROCE Leaders, Asian Paints, Berger, Takeover News, EduInvesting