Buy Sirca Paints Ltd for the Target Rs. 690 by Choice Institutional Equities
Strong Growth Outlook Backed by Capacity Expansion & Premium Demand
Q4FY26 delivered resilient growth despite a soft demand environment, supported by acrylic and advanced coating systems, wider distribution reach and stronger engagement of architects, designers and institutions. FY26 marked a transformational year for Sirca, wherein the company outperformed the subdued paints industry average through its differentiated portfolio, premium positioning and deeper market penetration.
The launch of Wembley–Valentino brand supported Sirca’s entry into premium and Mass and Premium segments, the company served over 900 OEM clients and over 4,000 retail touchpoints.
SIRCA enters into the next quarter with a strong balance sheet, expanded capacity, superior product portfolio, improved cost structure and a clear strategic roadmap for sustainable growth. We forecast Sirca's Revenue/EBITDA/PAT to respectively expand at 22/23/26% CAGR over FY26–29E.
Valuation: We reiterate our BUY recommendation on SIRCA and value the company at 22x FY28E EV/EBITDA, which we believe remains a conservative multiple considering its strong growth visibility and premium positioning. This translates into a target price of INR 625/share, which is an upside of 43%. We did a sanity check of our EV/EBITDA TP using implied P/E and P/BV multiples which continue to support our target valuation framework.
Risks to our BUY rating: A possible slowdown in the real estate market, furniture, renovation, interior fit-outs and probable predatory pricing could affect SIRCA’s business.
Q4FY26 Review: Revenue and Profitability Continue Upward Momentum
* Revenue grew 33.1/19.1% YoY/QoQ to INR 1,343 Mn (vs CIE estimate of INR 1,312 Mn)
* EBITDA grew 35.5/11.7% YoY/QoQ to INR 257 Mn. EBITDA margin expanded by 34 bps YoY (contracted 126 bps QoQ) to 19.1%, reflecting stronger efficiency (vs CIE estimate of 21.6%)
* RPAT is up 31.1/17.7% YoY/QoQ to INR 177 Mn (vs CIE estimate of INR 190 Mn). The current quarterly result underlines a sustained growth and resilience in a competitive market.
* SIRCA has recommended a final dividend of INR 2.0/share for FY26
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SEBI Registration no.: INZ 000160131
