Motilal Oswal's research report on Indigo Paints
Indigo Paints (INDIGOPN) reported in-line sales in 4QFY23. EBITDA beat our estimate as EBITDA margin at ~22% touched the highest level in the last three years, driven by a favorable product mix and cost control initiatives. Management stated that demand was exceptionally strong in April’23 and the momentum was intact in May’23 as well. This is good news for INDIGOPN in a usually weak quarter (1Q). INDIGOPN has recently launched a complete range of waterproofing solutions for the retail segment, and with investment in Apple Cheime, it will also target institutional customers. The management expects a revenue contribution of ~8-9% from the waterproofing segment in the next 2-3 years. Maintain BUY.
Outlook
We retain BUY with a TP of INR1,700 (based on 40x FY25E EPS), given the high-growth opportunity on a small base and inexpensive valuations.
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