Buy Indigo Paints; target of Rs 1750: Motilal Oswal

Motilal Oswal is bullish on Indigo Paints has recommended buy rating on the stock with a target price of Rs 1750 in its research report dated November 09, 2024.

Broker Research

November 12, 2024 / 15:22 IST

Buy

26 Aug, 2025 12:21

Volume

Todays L/H

Motilal Oswal's research report on Indigo Paints

Indigo Paints’ (INDIGOPN) standalone sales growth stood at 7% YoY in 2QFY25 (6% in 1QFY25, 18% in FY24) due to subdued industry demand (1% down in 1HFY25). Apple Chemie (subsidiary) clocked robust sales growth of 28% YoY. Consolidated sales rose 7% YoY to INR3.0b (in line). Consolidated GM contracted 190bp YoY/290bp QoQ to 43.7% (est. 46.1%) due to price cuts in 2HFY24. Employee costs increased 17% YoY (+80bp), while other expenses remained flat YoY. EBITDA margin dipped by 120bp YoY/140 QoQ to 13.9% (est. 14.7%). The company expects the low demand scenario to end in 3Q, with a sharp rebound to normal growth rates in the seasonally favorable quarters. We model 10% revenue and 7% EBITDA growth in 2HFY25.

Outlook

Given the relatively small scale of INDIGOPN (INR13b revenue in FY24) in the large paints industry, the company has been able to grow much faster than the industry. Consumers’ rising acceptance of the brand and the expansion of distribution have been driving its outperformance. However, the changing competitive landscape will be a key monitorable. We reiterate our BUY rating with a revised TP of INR1,750 (40x Sep’26E EPS).

For all recommendations report, click here