Indigo Paints: Upcoming Star

Expstrong textanding presence. Indigo Paints to foray into waterproofing strong text , construction chemicals; expand reach

Source : Indigo Paints to foray into waterproofing, construction chemicals; expand reach - The Hindu BusinessLine

Posted good set of overall numbers.

Some highlights:

  1. Gross margin in Q4 FY23 came in at 46.82%, best in the industry if I am not wrong.
  2. EBIDTA margin also expanded to 22% this quarter.
  3. Crossed the 1000 Crores mark in revenues for the full year for the first time
  4. Revenue, PAT and EBIDTA all grew considerably this year. However, interesting thing to note is that while revenue grew at 18.47%, EBIDTA grew at 33.5% and PAT at 56.98%, which in my mind is a big positive as bottom line is growing more exponentially than sales.

All good signs so far. If someone else who’s also been following this business can analyze the results and point out any negatives, that would be great.

Disc: Invested and biased. Not a buy/sell recommendation.

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Positives:

  1. Margin expansion even though some of the benefits are passed to retailers due to a better product mix.
  2. Good growth in enamels and wood coatings.
  3. Acquisition in construction range and also entered into waterproofing products.
  4. Slight market share gain over peers(Maybe in the range of 0. something for the quarter)
  5. Growth in Tier 1 & 2 towns is double of Tier 3 & 4 towns.
    Negatives:
  6. Decrease in Active Dealers.
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KEY insight From Concall of Q1 FY24

  1. One of the best Concall that I have read this year
  2. Management is very bullish on there business
  3. High volume growth in all categories
  4. Jodhpur plant 90000 KLPA operational by end FY25
  5. Three month back they acquired satke in Apple chemie a fast growing company in construction chemical and water proofing space
  6. Apple chemical expected to become a pan Indian player in couple of years (currently only maharashtra)
  7. The only risk i found is that there 28% revenues come from only kerala state,
    But this share gradually decreasing.
    Disc : Invested and biased. Not a buy/sell recommendation.
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