Buy Indigo Paints; target of Rs 1400: Motilal Oswal

Motilal Oswal's research report on Indigo Paints

Indigo Paints’ (INDIGOPN) standalone sales were flat YoY in 1QFY26 due to consistent demand headwinds and the early onset of monsoon. Apple Chemie’s (subsidiary) sales declined 18% YoY. Consolidated sales declined 1% YoY to INR3.1b (below). Management indicated that while the first half of the quarter saw a healthy offtake, the early onset of monsoon, especially in East and South, dented 1Q’s performance. However, July saw an improvement in demand, and management expects this growth momentum to sustain, anticipating a healthy pent-up demand in 2HFY26. The company indicated that it does not anticipate any significant competitive intensity in the near term. We model a CAGR of 14%/16% in revenue/EBITDA in FY26-28E.

Outlook

We reiterate our BUY rating with a revised TP of INR1,400 (premised on 35x Jun’27E EPS).