Indigo Paints achieved remarkable growth in the first quarter of the fiscal year, outpacing the industry by three times in terms of sales growth from April to June. Hemant Jalan, the CMD, expressed his satisfaction with the company’s renewed strategy focusing on larger cities instead of smaller towns, and he noted that the results are starting to become evident. The aim is to sustain this growth trend for several quarters. Jalan emphasized that even though their market share remains around 2.5 percent, there’s ample room for expansion, with aspirations to compete with major industry players.
He underscored that Indigo Paints has consistently maintained high gross margins, surpassing the industry leader by a significant margin. Similarly, the company’s EBITDA and PAT margins rank among the top in the industry. Jalan emphasized that their growth strategy will not compromise profitability, stating that prioritizing growth over margins is not their approach.
The recent financial results for the June quarter of 2023-24 demonstrated Indigo Paints’ exceptional performance, with a revenue growth rate of 29 percent, driven by their focus on Tier 1 and 2 cities. The revenue for this quarter reached Rs 288.1 crore, marking a significant increase from Rs 223.9 crore in the same quarter of the previous year. In comparison, larger competitor Asian Paints reported a seven percent growth, while Kansai Nerolac posted five percent.
Indigo Paints’ gross margins improved to 47.3 percent in the June quarter, up from 45.2 percent in the corresponding period last year. The company’s EBITDA surged by 39 percent to Rs 49.1 crore, leading to an EBITDA margin improvement to 17 percent from 15.8 percent last year. The profit after tax also saw an impressive jump of 58 percent YoY, reaching Rs 31.51 crore in the quarter compared to Rs 19.94 crore in the first quarter of the previous fiscal.
Sales growth was more pronounced in Tier-1 and 2 cities than in Tier-3 and 4 areas and rural regions, according to the company. Indigo Paints is actively working on establishing a new water-based paint plant with a capacity of 90,000 KLPA in Jodhpur, along with implementing a 12,000 KLPA solvent-based paint plant in the same location.
The performance of Indigo Paints shares has been noteworthy, with a rally of over 73 percent from its 52-week low in March 2023. The stock reached a high of Rs 1,700, slightly down from the 52-week high reached on August 26, 2022. Currently, Indigo Paints shares are trading at Rs 1621.25 apiece on BSE as of 12:08 pm.