Buy Indigo Paints; target of Rs 1750: Sharekhan

Sharekhan's research report on Indigo Paints

Indigo Paints Limited’s (IPL’s) Q1FY2025 numbers were weak as margins lagged expectations. OPM fell by ~180 bps y-o-y to 15.2%, while PAT declined by 15% y-o-y. Consolidated revenue grew by 7.8%. IPL has witnessed high y-o-y sales growth in July as compared to past 7-8 months. It expects a sharp uptick in revenue and PAT from Q2 onwards. It targets domestic paint market share to improve to 5% from 3% currently in the coming years. Waterproofing segment is gaining strong traction and is expected to reach 10% of revenues in the next three years from current 5-6%.

Outlook

Stock trades at 43x/34x its FY2025E/FY2026E earnings, respectively. We maintain our Buy rating with a revised PT of Rs. 1,750.