Sharekhan's research report on Indigo Paints
Indigo Paints Limited’s (IPL) Q3FY2023 performance was affected by delayed withdrawal of monsoon, resulting in 6% y-o-y revenue growth to Rs. 281.3 crore. OPM stood flat at 14.4%; PAT grew by 8% y-o-y to Rs. 26 crore. Q4 is seasonally a strong quarter. Sales volume improved substantially in November/December 2022 and momentum continued in January 2023. The strategy of expanding base in a larger city is working well. The company is planning to enter into a highly growing waterproofing and construction chemical category in India in FY2024. Stabilising input prices augurs well for the company to focus on improving sales volume in the near future.
Outlook
The stock has corrected by 41% in the past one year and is trading at a reasonable valuation of 31.8x/24x its FY2024E/FY2025E earnings. We maintain Buy with a revised PT of Rs. 1,400.
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