Akzo Nobel India Ltd. reported an 8.2% increase in operating income for Q2FY16. EBITDA margin improved to 9.1% due to operating costs growing at a lower rate than operating income. Net profit increased 15% to Rs. 409.8 mn despite a contraction in other income, supported by lower interest costs and taxes. The management commented that all business segments focused on innovation, brands and distribution, driving revenue and profit growth despite a weak monsoon.

1. Akzo Nobel India Ltd.
Paints
Q2 FY16 First Cut
Buy
Operating income increases by 8.2% in Q2FY16
Akzo Nobel India has reported 8.2% YoY increase in operating income to Rs6,565.1 mn. Revenue from the coating segment
increased by 8.2% to Rs6,138 mn as compared to Rs6,067.1 mn reported in the same quarter of previous fiscal. However,
other operating income rose by significant 69.2% to Rs427 mn in the quarter under review from Rs252.4 mn in Q2FY15. On
QoQ basis other operatingincome roseby 7.2% in Q2FY16.
EBIDTA Margin improves to 9.1%
Operating expenditure increased by 7.8%YoY in Q2FY16 to Rs5,968.1mn and 2.1% on QoQ basis. Growth in operating cost
was lower than operating income growth leading the EBIDTA margin to improve to 9.1% in the quarter under review
compared to 8.7% EBIDTA margin in the previous quarter. During quarter, EBIDTA of the company stood at Rs597 mn which
was 12.5% higher as compared to same quarter in FY15.
Net Profit increases by 15% to Rs409.8 mn
The company reported 15% YoY increase in net profit to Rs409.8 mn despite 4% contraction in other income reflecting a
strong growth in operating income. Further, the contraction in interest cost and low tax outflow supported the bottom line
growth for the company. Net Profit Margin (NPM) also improved to 6.2% in the reported quarter compared to 5.9% in the
previous quarter.
Management View
Commenting on the results, the management has announced that in line with the company's strategy of achieving profitable
growth, all business segments have continued their focus in strengthening their products through innovation, brands and
distribution. This has reflected in an increase in demand for the company's products despite the scarce monsoon, driving
healthy growth in revenue and profit in this quarter.
1
Oct 21, 2015
SatishKumar Sharma | Desk Phone:022 - 6707 9974 | satish.kumar@choiceindia.com
Particulars (Rs mn) Q2FY16 Q2FY15 YoY Q1FY16 QoQ
OperatingIncome 6,565.1 6,067.1 8.2% 6,584.0 -0.3%
OpetatingExpenditure 5,968.1 5,536.3 7.8% 5,846.5 2.1%
EBIDTA 597.0 530.8 12.5% 737.5 -19.1%
EBIDTA Margin 9.1% 8.7% 11.2%
Depreciation/Amortisation 135.7 127.1 6.8% 131.5 3.2%
Total Expenses 6,103.8 5,663.4 7.8% 5,978.0 2.1%
OtherIncome 148.2 154.2 -3.9% 75.1 97.3%
Finance Costs 2.9 4.1 -29.3% 3.8 -23.7%
Tax Expenses 196.8 196.3 0.3% 224.2 -12.2%
NetProfit 409.8 357.5 14.6% 453.1 -9.6%
NPM(%) 6.2% 5.9% 6.9%
EPS (Rs) 8.8 7.7 14.6% 9.7 -9.6%
Akzo Nobel India Ltd. has reported the Q2FY16 resultwhich came in linewith our expectations with net profitroseby
14.6% to Rs409.8 mn.
Key Financials (Standalone)