Company Update : Indigo Paints Ltd by Motilal Oswal Financial Services Ltd
Demand shows improvement; beat on operating performance
Consolidated financial performance
* Indigo Paints’ net sales grew 4% YoY to INR3,121m (est. INR3,025m).
* Industry demand saw an improvement despite continued weatherrelated disruptions.
* The Premium segment in the Emulsions & Enamels category is outperforming the Economy segment.
* Apple Chemie’s revenue grew 23% YoY INR136m.
* Gross margin expanded 110bp YoY to 44.8% (est. 44.5%), led by a better product mix.
* Employee expenses rose 5% YoY, while other expenses increased 4% YoY.
* EBITDA margin expanded 110bp YoY to 14.9% (est. 14.2%).
* EBITDA rose 12% YoY to INR465m (est. INR430m).
* PBT increased 11% YoY to INR338m (est. INR322m).
* APAT increased 11% YoY to INR251m (est. INR240m).
Outlook
* The company is observing clear signs of demand recovery, driven by strong secondary sales.
* The product mix is expected to improve as the exterior paint application picks up.
* EBITDA margins for FY26 are expected to expand with an improvement in demand, lower raw material prices, and improved product mix.
* Apple Chemie is expected to deliver strong performance in both revenue and profitability with the launch of new products and improving sales traction in the East and South zones.
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