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Buy Indigo Paints; target of Rs 2270: Motilal Oswal

Motilal Oswal is bullish on Indigo Paints recommended buy rating on the stock with a target price of Rs 2270 in its research report dated December 31, 2021.

December 31, 2021 / 11:32 AM IST
 
 
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Motilal Oswal's research report on Indigo Paints


Established in the year 2000, Indigo Paints (INDIGOPN) is the fifth largest company operating in the INR542b (USD7.2b) Paints industry in India. Its product portfolio includes emulsions, enamels, wood coatings, distempers, primers, putties, and cement paint. Despite being a late entrant to this industry with high entry barriers, INDIGOPN has been able to create its presence in the market through its multi-pronged strategy of introducing differentiated products, high ad spends (as a percentage of sales), focusing on the rural markets, and increasing the penetration of tinting machines. The company has a presence in 27 States and 7 Union Territories with its distribution network of more than 14,700 dealers.


Outlook


We expect INDIGOPN to continue with its robust strategy and thereby deliver a sales/EBITDA/PAT CAGR of ~28%/35%/41% over FY21–24E. The recent sharp price hikes across the industry would further support sales growth and margin recovery in 2HFY22/FY23E. We initiate coverage with a Buy rating, with TP of INR2,270 (55x FY24E EPS).


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At 11:10 hrs Indigo Paints was quoting at Rs 2,176.85, up Rs 234.45, or 12.07 percent.


It was trading with volumes of 9,068 shares, compared to its thirty day average of 2,435 shares, an increase of 272.43 percent.


In the previous trading session, the share closed down 1.42 percent or Rs 27.95 at Rs 1,942.40.


The share touched its 52-week high Rs 3,348.00 and 52-week low Rs 1,490.00 on 03 February, 2021 and 29 January, 2021, respectively.


Currently, it is trading 34.98 percent below its 52-week high and 46.1 percent above its 52-week low.


Market capitalisation stands at Rs 10,355.06 crore.


For all recommendations report, click here


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first published: Dec 31, 2021 11:18 am
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