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New Delhi, India

Akshita is an equity research analyst working with a US Research firm and an aspiring CFA charter. With a keen interest in financial modeling and valuation, she prepares exemplary-detailed research reports.

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Contributor since: 2022








Comments: 0 | Likes: 1 | Current Price: ₹ 1469.3

Initial Coverage: Indigo Paints

The company has a strong presence in tier III and tier IV markets, where brand penetration is relatively easy, and dealers have more power to influence customers’ buying decisions and these markets allowed the company to expand its brand and presence in the Indian market.


  • The decorative paint category constitutes ~75% of the overall market and includes multiple categories like exterior wall paints, interior wall paints, wood finishes and enamels, as well as ancillary products like primers, putties, and so on. The industrial paint category constitutes ~25% of the paint market and includes a broad array of segments like automotive, marine, packaging, powder, protective and other general industrial coatings. The development is equal and rapid in all areas, right from architecture to powder, automotive to coil, high-performance to general industrial, refinish to wood, and packaging to plastic.
  • The real estate sector is on a path to recovery post Covid. Demand in real estate is being witnessed particularly in tier-2 and tier-3 cities due to reverse migration, flexible work options, learning from home and demand for open spaces. Sales and new launches have witnessed increased traction setting record growth. Lower interest rates, improved market sentiments, and reduced risk of further disruptions have created additional demand for real estate. This augurs well for paint industry, driving up demand across categories. Re-painting activities are increasing in the country as repainting cycle is set to shorten from 7-8 years to 4-5 years.
  • Innovative paints are finding increasing acceptance among the consumers. Oil-based paints are giving way to water-based paints, since it has little to no harmful emissions. Water-based paints offer superior endurance and performance than solvent-based paints when it comes to environmental compliance.
  • In India, per capita paint usage stands at 4.1 kg (in 2019), which is still quite low when compared to developed western nations, however it is expected to rise as the country continues to grow. The infrastructure push by the government backed by schemes such as Pradhan Mantri Awas Yojana (PMAY), AMRUT and Housing for All are likely to drive the demand for interior paints with a particular focus on medium and economy range products.


  • Indigo Paints was founded in the year 2000 and is the fifth largest company (market share of ~2% in the organized paint industry) in India’s paints sector. Its decorative paints portfolio constitutes emulsions, enamels, wood coatings, distempers, primers, putties and cement paint.
  • The company has a strong presence in tier III and tier IV markets, where brand penetration is relatively easy, and dealers have more power to influence customers’ buying decisions and these markets allowed the company to expand its brand and presence in the Indian market.
  • Company has branded its products with different labels based on price points such as platinum, gold, silver, and bronze series, respectively. It is presently expanding its distribution networks in metro and tier I cities. They achieved brand recognition and strong consumer recall through persistent branding and marketing. It has 1,10,700 KLPA installed production capacity for liquid paints and 1,38,000 MTPA installed production capacity for putties and powder paints.
  • It has four manufacturing units; Jodhpur, Rajasthan- unit I for emulsion paints, distempers, primer & other products; Jodhpur, Rajasthan- unit II for putties & cement paints; Kochi (Kerala) for emulsion paints, primer & other products; Pudukkottai (Tamil Nadu) for enamels, wood coatings, primer & other products. New product developed in FY22 was: anti-odor paint for kitchen and bathrooms rustic texture finish.
  • In FY22, it opened an additional depot in Karnataka and opened a depot each in Delhi & Himachal Pradesh taking the total depot count to 47. Through an active dealer network of 16,785 it has presence across India and the total tinting machines as on 31st December 2022 was 7,978.


Enhancing scale to address growing demand: The company have been constantly investing in manufacturing capabilities and establishing a strong capacity base to serve the demand of customers. They are moving towards building a greater and efficient manufacturing processes to deliver innovative offerings.



Delivering value through a multi-capital approach



Hemant Jalan is the Managing Director and Chairman of the company. The management believes that enhancing the distribution network and deploying more tinting machines through the dealer base is pivotal to its growth strategy. Its strategy includes introducing differentiated products, building a distribution network in rural and tier I, tier-II & III markets, building brand equity through high advertisement spending, driving the rapid penetration of tinting machines, and engaging with influencers (painters/contractors). Nupur Garg the non-executive independent director of the company submitted her resignation on 4th May 2023.



  • Rising raw material prices is one of the most pressing issues facing the paint business, and most industry participants have passed on the cost of higher raw materials to customers through price hikes.
  • Most of the raw materials used by the paint industry are derived from crude oil, thus continuous hike in crude prices owing to current geopolitical scenario, will have an influence on user industries, including the paint industry.
  • Supply chain disruptions severely affect the industry because a large amount of working capital is involved for purchasing raw materials from several sources.
  • Roughly 30% of the raw ingredients are imported from other countries, import rules have a significant effect on the pricing of paints. As a result, any change in the import tax regime might impact the costing.



  • FY 23 Operational Income has expanded by 18.47% to Rs. 1,073.33 Cr from Rs. 905.97 Cr clocked in FY22.
  • Gross Margins improved to 44.54% y-o-y from 43.32% in FY22.
  • Healthy growth in EBITDA and PAT by 33.50% and 56.98% respectively over FY22.
  • EBITDA margin expanded to 16.91% from 15.01% in FY22.
  • PAT margin expanded to 12.18% compared to 9.17% in FY22.
  • Growth in Net revenue for the FY 23 was 18.47% which was in line with the industry trend.
  • Gross margin at 44.54% is the highest in the industry despite the strategy to pass on some benefits in the gross margins for a higher growth. Margins primarily driven by better product mix and prudent material purchase policy.
  • EBITDA margin was at 16.91%, a sharp increase from previous year; A&P cost reduced from 9.72% (FY 22) to 7.70% (FY23), although absolute amounts of A&P were largely unchanged.
  • PAT margin continues to be healthy at 12.18%


  • Q4 FY 23 Operational Income has expanded by 12.86% over Q4 FY 22 from Rs. 288.38 Cr to Rs.325.47 Cr.
  • Gross Margins expanded to 46.82% in Q4 FY23 over 43.61% in Q4 FY22 and 43.82% in Q3FY23.
  • EBITDA and PAT have expanded by 33.40 % and 40.74% respectively over Q4 FY22.
  • EBITDA margin expanded significantly to 22.04% from 18.64% in Q4 FY22.
  • PAT margin also expanded significantly to 14.83% compared to 11.89% in Q4 FY22.
  • Growth in Net revenue for the quarter largely in line with the industry.
  • Gross margin at 46.82% is the highest in the industry and with stabilized raw material prices, expect the same trend to continue barring any black swan events.
  • Company had clocked the highest EBITDA margin of 22.04% in the last two years primarily driven by favorable product mix and prudent cost control measures.



Financial Performance:

  • Indigo Paints has crossed INR 1,000 crores on a net revenue basis.
  • Q4 FY23 sales registered a value growth of 12.86% YoY.
  • EBITDA increased by 33.4% YoY.
  • EBITDA margin of 22.04% is the highest in the last two years.
  • PAT grew by 40.74% YoY.
  • Board recommended a dividend of INR 3.50 per share.

New Products and Acquisitions:

  • Indigo Paints acquired a 51% stake in Apple Chemie India Private Limited.
  • New paint plant at Pudukottai started trial production and will enter commercial production soon.
  • Work on setting up a state-of-the-art 90,000 KL per annum paint plant at Jodhpur has begun.
  • Apple Chemie has a client base that includes major engineering and construction conglomerates in India.
  • Sales team for waterproofing and construction chemicals will be the same as the paint products.
  • Advertising campaign for new products with brand ambassador Mr. Dhoni planned for H2 2021.
  • Manufacturing capacity of Apple Chemie is adequate for B2B production and sales.

Margins and Capacity Utilization:

  • Gross margins maintained with seasonal variations from Q1 to Q4.
  • EBITDA margins of Apple Chemie are similar to Indigo Paints.
  • Capacity utilization during peak months managed without any loss of sale.
  • Peak sales expected to reach INR 1,700-1,800 crores with current capacity and INR 2,500 crores with Jodhpur capacity expansion.

Market Share and Competition:

  • Market share in decorative paint market around 2%.
  • Industry leader has slightly more than 50% market share.
  • Number two player has around 17-20% market share.
  • Recent foray by a waterproofing company into the paint segment not a major concern.
  • Entry of new players in the paint industry not a concern as the market is large enough to absorb new entrants.

Other Points:

  • Indigo Paints aims to provide excellent customer service.
  • Addressable market for waterproofing products at the retail level is around INR 8,000 crores.
  • Receivables number fluctuates quarterly.
  • Traditional method of accounting for sales pattern has errors due to GST component and heavy sales in certain months.
  • Profitability and growth of existing players will not be significantly impacted by new entrants.
  • Management hopes to improve top line growth in the coming quarters.


  • The company is building trust with influencers (painters/contractors) by constant engagement, in addition to providing financial incentives. Several attempts are being made to widen dealer network in tier I cities and focus on engaging with painters and contractors of these cities.
  • Indigo Paints is the first company in India to offer metallic paint for walls, floor paint that can withstand vehicular traffic, specifically developed ceiling paint for brighter ceilings, and a unique tile paint for roofs. Also, it is the first company to launch certain other types of emulsion paints such as the dirtproof & waterproof exterior laminate, exterior and interior acrylic laminate and enamels such as PU super gloss enamel.
  • On 3rd April 2023, Indigo Paints closed a transaction with the promoters of Apple Chemie India Private Limited (ACIPL), for acquiring 51% stake, by a combination of primary capital infusion and secondary share purchase transaction with the promoters. Indigo Paints also has an option to acquire additional stake in Apple Chemie at the end of 3 years. The company bought 44,924 shares for ₹6,529 per share. ACIPL is in the construction chemicals and water proofing space, manufacturing and supplying products in the B2B space to various reputed infrastructure projects in the western states of India. Its sales in FY22 was ₹32 cr, and is expected to clock over ₹41 cr in FY23.
    • Of the recent additions in tinting machines, ~50% of them are being installed in the targeted 750 cities and the company has been observing substantial rise in sales from these areas. Company’s strategy on increasing the presence in tier I and tier II cities are showing good results and it will continue to strengthen the team to engage with the influencers.
    • It would soon be launching (anticipated by Q1 FY24) a complete range of waterproofing product & construction chemicals in the retail space
  • The company is currently trading at a TTM PE multiple of 53.28x. Its key priorities going forward would be to enhance output per dealer in the 750 cities (which are big cities of the country by population, and it will be looking to deepen its penetration), intensive engagement with the influencer community to drive sales, aggressive innovation to strengthen differentiation in products, increase distribution footprint through wholesalers in select cities and invest in brand building activities.
  • The dividend pay-out ratio in FY22 was 16.98%. It paid a final dividend of ₹3/share.






I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Business relationship disclosure:

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Stocx Research Club). I have no business relationship with any company whose stock is mentioned in this article.

Disclosure legality:

I am not a SEBI Registered individual/entity and the above research article is only for educational purpose and is never intended as trading/investment advice.


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