New Delhi: After two muted years for the decorative paints industry, Indigo Paints Limited is beginning to see what it calls “measured recovery” — not a dramatic rebound, but a steady return of customers to paint shops.
The company’s third-quarter earnings call reflected cautious optimism. October was a washout, executives admitted, as delayed monsoons and an early Diwali compressed the festive repainting window. But November and December more than made up for it, with double-digit value growth helping the company close the quarter on firmer footing.
Profitability expands despite modest top-line growth
For Q3 FY26, standalone revenue from operations stood at ₹338.9 crore, up 3.5% year-on-year. What stood out, however, was margin expansion. EBITDA rose 14.5% to ₹65.6 crore, with margins improving to 19.4% from 17.5% a year ago.
A one-time provision of ₹5.85 crore related to gratuity expenses under the draft labour code weighed on reported profit, but adjusted PAT came in at ₹40.5 crore, up 11.2% year-on-year. Consolidated numbers, which include subsidiary Apple Chemie, showed a similar pattern — revenue growth of 4.7%, but EBITDA growth of nearly 20%.
Chairman and Managing Director Hemant Jalan described the quarter as one where “profitability ran ahead of revenue,” crediting a favourable product mix and tighter cost controls.
Premium mix holds ground
One of the more telling trends has been Indigo’s continued shift toward premium products. While industry commentary has often highlighted downtrading by consumers in recent quarters, Indigo’s management said premium emulsions continued to grow in value terms, even when volumes softened.
Enamels and wood coatings led the quarter with nearly 19% value growth. Waterproofing products — once a negligible category for the company — now contribute close to 7% of revenue, underscoring Indigo’s strategy of building niche segments where it can command pricing power.
At the other end, economy-range emulsions underperformed during the first nine months, though management indicated January saw record sales in that category after recalibrating trade schemes and influencer engagement.
Advertising reset, dealer throughput focus
Unlike some larger rivals, Indigo has consciously moderated traditional advertising. For the first nine months of FY26, advertising and promotion (A&P) spend fell to 5.9% of revenue from 7% a year ago. Absolute spends remain steady, but higher revenues have lowered the ratio.
The company is reallocating budgets toward painter and influencer engagement rather than only television campaigns. “In paints, back-of-the-mind recall matters, but recommendation by the influencer matters even more,” Jalan noted during the call.
Dealer expansion, too, is becoming more nuanced. Active dealers stood at over 19,100 at the end of December, but management emphasised throughput per dealer rather than aggressive network addition. Tinting machines — a key indicator of product mix and dealer engagement — have risen faster than dealer count, signalling deeper penetration rather than mere footprint expansion.
Capex cycle nears completion
Production has begun at the new solvent-based facility in Jodhpur, aimed at serving northern and eastern markets more efficiently. A brownfield putty expansion is also operational, while a new water-based plant with 90,000 KL annual capacity is expected to go live in June 2026.
The capex, initiated during stronger demand years, will increase depreciation in the near term. However, management believes the investments position the company well for the next growth cycle and will largely conclude major capital expenditure for the next four to five years.
Apple Chemie riding infra wave
Subsidiary Apple Chemie delivered 31.5% revenue growth in Q3, aided by infrastructure-led demand for construction chemicals. A new sealant plant in Nagpur has commenced production, and export opportunities are being explored.
Industry revival — steady, not spectacular
Perhaps the most candid takeaway from the call was the tone around demand. Management acknowledged that the past two years were challenging across consumer categories, not just paints. Tax relief measures, interest rate cuts and improving consumer sentiment are beginning to show up in paint demand as well.
Indigo reported double-digit value growth in November, December and January — the first such three-month streak in over two years.
It is not a “hockey-stick recovery,” Jalan cautioned. But after an extended period of subdued repainting cycles and cautious consumer spending, even steady improvement offers relief.
For a company that built its identity on differentiated products and disciplined margins, the coming quarters will test whether premiumisation and sharper trade execution can translate early green shoots into sustained double-digit growth.
If the festive slump was a reminder of how weather and sentiment can derail a quarter, the recent bounce is a sign that the brush may finally be moving again.