Indigo Paints Q1 Results Review - Market-Leading Growth Sustained: ICICI Securities

ICICI Securities Report

While the market growth has slowed down in Q1 FY25, Indigo Paints Ltd. continued to outperform and gained market share for fifth straight quarter. We note-

1. Strong investments in distribution (up 10.8% YoY) and tinting machines (up 17.9% YoY) led to standalone revenue growth of 6.1% YoY.

2. Apple Chemie reported 47.1% revenue growth indicating benefits of investments in distribution and revival in B2B markets.

3. Increase in staff cost (up 24.3% YoY) is primarily attributable to increase in feet-on-street. We model the revenue/employee to inch up in rest of FY25 as the industry growth revives.

4. There is slowdown in key market of Kerala for indigo. We believe ex-Kerala, revenue growth of Indigo was in low double digits.

5. The company has largely maintained the gross margins (down 70 bps) in-spite of price cut of ~4%, input inflation and change in revenue mix (higher share of primer, distemper, cement paints and putty) and flattish revenues for Emulsions.

Upgrade to Add. Retain underweight on large cap paints. Contrarian investors may consider owning Akzo Nobel, Indigo Paints, Kansai Nerolac.

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