Hold Indigo Paints: target of Rs 1380: ICICI Securities

ICICI Securities's research report on Indigo Paints

Indigo’s strategy 2.0 has continued to yield strong results with market share gains for straight fourth quarter. We are also enthused by (1) the company has materially increased the investments in waterproofing and construction chemical business. It has rolled out ‘Indigo protect plus series’ with multiple products and Mahendra Singh Dhoni as brand ambassador. Apple Chemie is now rolled out through additional eight states. (2) It has expanded dealer and tinting machine network by 9.8% and 19%, respectively YoY. We model maturity of these new stores to result in higher revenue growth in FY25-26 and (3) The revenue-per-store is up 7.4% YoY. While there is downtrading in overall paint industry with higher off-take of low-priced products, we like Indigo has reported 13.7% YoY volume growth in emulsions.

Outlook

We model sales and earnings CAGR of 17% and 13% respectively, over FY24-FY26E. Maintain HOLD with an unchanged DCF-based TP of INR1,380 (implied P/E of 35x FY26E).