Akzo Nobel tumbles 9% on weak Q2 earnings

Akzo Nobel India has tumbled 9% to Rs 810 after reporting 28% year-on-year (y-o-y) drop in net profit to Rs 26.31 crore for the quarter ended September 2011, as compared to Rs 36.52 crore in the corresponding quarter of previous fiscal, despite of 26% growth in net sales at Rs 304 crore on y-o-y basis.

The net profit of the paint maker impacted due to higher raw material cost (up 32%) and other expenditure (up 66%) during the recently concluded quarter.

Meanwhile, in order to provide the company with a smooth access to Akzo Nobel Group's technology and brands, a comprehensive arrangement has been approved by the board of directors, under which the company will be paying, in the initial period, a royalty of about 1% of net sales that would go up in the next few years to around 3% depending upon the sales mix

The stock opened at Rs 872 and hit a low of Rs 806 on the Bombay Stock Exchange. A combined 43,000 shares have changed hands on the counter till 1055 hours.