Stock Analysis & Valuation Tikkurila Oyj (0MFI.L)

• Previous Close: £34.00
• Sector Valuation Confidence Level: Moderate

Valuation method	Value, £	Upside, %
Artificial intelligence (AI)	n/a	n/a
Intrinsic value (DCF)		n/a
Graham-Dodd Method		n/a
Graham Formula	14.34	-58

Strategic Investment Analysis

Company Overview

Tikkurila Oyj is a leading Finnish paint and coatings company with a rich heritage dating back to 1862. Specializing in decorative paints for both consumer and professional markets, Tikkurila operates across Finland, Sweden, Russia, Poland, and other international markets. The company’s product portfolio includes interior and exterior paints, lacquers, and protective coatings for wood, masonry, and metal surfaces. Tikkurila markets its products under well-known brands such as Tikkurila, Beckers, Alcro, and Finncolor, catering to home improvement stores, paint retailers, and industrial clients. With a strong presence in Northern and Eastern Europe, Tikkurila is recognized for its high-quality, environmentally friendly coatings and innovative color solutions. The company’s dual-segment structure—SBU West (Nordics and Poland) and SBU East (Russia and CIS)—allows it to adapt to regional market demands effectively. As part of the industrial materials sector, Tikkurila plays a key role in the basic materials industry, serving both residential and commercial construction markets.

Investment Summary

Tikkurila presents a stable investment opportunity with a well-established brand presence in Northern and Eastern Europe. The company reported solid financials for FY 2020, with revenue of €520.8 million and net income of €38.5 million, supported by strong operating cash flow of €87.2 million. A diluted EPS of €0.87 and a dividend payout of €6.77 per share indicate shareholder-friendly policies. However, investors should note the company’s exposure to geopolitical risks in Russia (SBU East) and competitive pressures in the European paint market. The beta of 1.28 suggests moderate volatility relative to the broader market. While Tikkurila’s debt-to-equity position appears manageable, its growth prospects may be constrained by regional economic conditions and raw material cost fluctuations.

Competitive Analysis

Tikkurila holds a competitive edge in Northern and Eastern Europe through its strong brand recognition, high-quality product offerings, and regional distribution networks. The company’s focus on eco-friendly paints aligns with growing consumer demand for sustainable coatings. However, it faces intense competition from global giants like AkzoNobel and PPG Industries, which have broader geographic reach and greater R&D resources. Tikkurila’s regional specialization allows for deeper customer relationships but limits its ability to scale compared to multinational peers. In Russia and the CIS, it competes with local players like Lakra-Sintez, leveraging its premium brand positioning. The company’s dual-segment strategy helps mitigate risks by balancing mature Nordic markets with higher-growth Eastern markets. While Tikkurila’s industrial coatings segment is smaller than its decorative paints business, it provides diversification. The main challenges include raw material price volatility and the need to continuously innovate to maintain market share against larger competitors with stronger marketing budgets.

Major Competitors

• AkzoNobel NV (AKZA.AS): AkzoNobel is a global leader in paints and coatings, with a strong presence in Europe and emerging markets. Its Dulux brand competes directly with Tikkurila in decorative paints. AkzoNobel’s scale and R&D capabilities give it an advantage in innovation, but Tikkurila’s regional focus allows for more tailored customer solutions in the Nordics.
• PPG Industries Inc (PPG): PPG is a dominant player in the global coatings market, with a diverse portfolio spanning automotive, industrial, and architectural coatings. While PPG’s size and technological resources outpace Tikkurila, it lacks the same depth in Nordic and Eastern European markets where Tikkurila has strong brand loyalty.
• Sherwin-Williams Co (SHECY): Sherwin-Williams is a major competitor in architectural paints, particularly in the Americas. Its acquisition of Valspar expanded its global reach, but its presence in Tikkurila’s core markets remains limited. Tikkurila’s regional expertise gives it an edge in customer service and distribution efficiency in Northern Europe.
• Lakra-Sintez (JSC LSR): Lakra-Sintez is a key local competitor in Russia’s paint market, offering cost-effective alternatives to Tikkurila’s premium products. While it lacks Tikkurila’s international brand prestige, its lower pricing and domestic production make it a strong contender in price-sensitive segments of the Russian market.