Brokerages see 34% upside in Indigo Paints despite 16% fall in Q1 net profit

A key trigger to watch for Indigo Paints would be any price hikes, said Nuvama Institutional Equities.

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26 Aug, 2025 12:21

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Despite recording a fall in profit for the quarter ended June, brokerages retained their optimism on Indigo Paints.

The paints player saw a 15.6 percent fall in consolidated net profit to Rs 26.2 crore for the quarter, as against Rs 31 crore in the corresponding quarter last year.

Revenue from operations, however, jumped 7.8 percent to Rs 310.96 crore, while EBITDA also fell to Rs 47.4 crore, down 3.5 percent on-year.

Consolidated GM contracted 70 bps on-year to 46.6 percent due to high discounts, increase in RM prices and price cuts. Employee costs

were up by 24  percent YoY, further denting operating performance.

Domestic brokerage Motilal Oswal noted that despite headwinds, Indigo Paints is sustaining growth outperformance among peers and successfully navigating through intense competition. Industry growth has been weak for the last six months and the brokerage is watchful for any reversal in this trend in H2FY25.

Motilal Oswal reiterated its buy rating with a target price of Rs 1,700 per share, indicating an upside of 15 percent from the previous close. The bullishness comes from the firm's growth outperformance, synergies with Apple Chemie, consistent capacity & distribution expansion, and its favorable valuation multiples compared to peers.

A key trigger to watch for Indigo Paints would be any price hikes, said Nuvama Institutional Equities. "All in all, factoring in higher depreciation cost on account of new plants, greater staff cost and a seasonally weak Q2FY25 (due to seasonality mix), we are cutting FY25 EPS by 5.6 percent."

However, Nuvama kept its buy call retained, with a target price of Rs 1,990 per share, implying a further headroom of 34 percent.