Indigo Paints posted a FY25 consolidated PAT of ₹142.2 Cr, down 4.5% YoY, on revenues of ₹1,340.7 Cr, up 2.7%. EPS dipped slightly to ₹29.68. The company declared a ₹3.50 dividend, holding onto its crown as a high-margin challenger in India’s paint wars. But with muted growth and EBITDA slipping 1.9%, is Indigo losing its shimmer in a JSW Paints vs. Asian Paints battle?
🖌️ About Indigo Paints
- Industry: Decorative Paints
- Founded: 2000, Pune
- Listed Since: 2021 (IPO priced at ₹1,490)
- USP: Aggressive rural penetration, product innovation (e.g. stain-resistant emulsions, metallic finishes)
- Market Position: 5th largest player in India, behind Asian, Berger, Nerolac, and Akzo
If paint companies were Bollywood families, Indigo is the self-made outsider with a cult following.
🧑💼 Key Managerial Personnel (KMP)
| Name | Role |
|---|---|
| Hemant Jalan | CMD & Founder |
| Chetan Humane | CFO |
| Price Waterhouse | Statutory Auditor (✅ clean opinion) |
✅ No audit flags.
📣 But management noted demand remained “muted” and margins slightly compressed.
📊 FY25 Financials (Consolidated)
| Metric | FY25 (₹ Cr) | FY24 (₹ Cr) | Change |
|---|---|---|---|
| Revenue from Ops | ₹1,340.7 | ₹1,306.1 | 🔼 +2.7% |
| Other Income | ₹18.5 | ₹14.2 | 🔼 +30.2% |
| Total Income | ₹1,359.2 | ₹1,320.3 | 🔼 +3.0% |
| EBITDA (Excl. Other Income) | ₹233.5 | ₹238.1 | 🔻 -1.9% |
| EBITDA Margin | 17.4% | 18.2% | 🔻 -80 bps |
| Net Profit | ₹142.2 | ₹148.8 | 🔻 -4.5% |
| PAT Margin | 10.5% | 11.4% | 🔻 -90 bps |
| EPS (Basic) | ₹29.76 | ₹30.95 | 🔻 -3.8% |
| Proposed Dividend | ₹3.50/sh | ₹3.50/sh | ➖ Same |
🎯 Key note: Despite soft demand, Indigo delivered 46% gross margin, among the best in the industry.
📦 Balance Sheet Snapshot (FY25)
| Metric | FY25 (₹ Cr) | FY24 (₹ Cr) |
|---|---|---|
| Total Assets | ₹1,410.2 | ₹1,270.4 |
| Net Worth | ₹1,030.6 | ₹902.1 |
| Borrowings | ₹6.8 | ₹1.6 |
| Lease Liabilities | ₹20.9 | ₹17.9 |
| Cash & Equivalents | ₹37.1 | ₹32.9 |
| Trade Receivables | ₹243.9 | ₹223.1 |
| Inventories | ₹153.6 | ₹170.6 |
🧾 No major debt, healthy liquidity, and continued investment in capacity and branding.
💸 Fair Value Estimate
- EPS: ₹29.76
- Sector P/E (Decorative Paints): ~45x (Asian Paints trades >65x)
- Fair Value Range: ₹1,190 – ₹1,340
📍 CMP = ₹1,037.95 → Fairly valued if FY26 sees flat growth; undervalued if volumes pick up again.
📈 Cash Flow Highlights
| Item | FY25 (₹ Cr) | FY24 (₹ Cr) |
|---|---|---|
| Operating Cash Flow | ₹205.7 | ₹151.0 |
| Capex Outflow | ₹136.2 | ₹104.4 |
| Net Investing Cash Flow | ₹-177.5 | ₹-151.7 |
| Financing (Dividend + Lease) | ₹-23.9 | ₹-23.2 |
| Net Change in Cash | ₹4.2 | ₹-23.8 |
✅ Strong free cash flow generation.
✅ Capex focused on plant expansion + R&D.
🤡 EduInvesting Take
Let’s call it like it is.
✅ Indigo Paints isn’t exploding in growth — but it’s quietly cementing its profitability
✅ EBITDA margins are at industry highs
✅ Inventory and receivable management = textbook clean
But…
❌ Growth is below inflation
❌ Margins have plateaued
❌ Stock is still below IPO price
And in a market where JSW Paints is willing to burn cash and Asian Paints keeps flexing its 60x P/E muscles, Indigo needs a bold new splash.
🔥 Risks & Red Flags
- 🧨 Stagnant topline = Market share pressure from new entrants
- 🖍️ Brand refresh needed to stay aspirational
- 🧾 Minimal price hikes = Gross margin risk in FY26
- 🌧️ Rural demand volatility due to erratic monsoons
🎯 Final Verdict
Indigo Paints is not a multibagger rocket. It’s a well-managed, high-margin paint company with:
🎨 Clean books
🧠 Sharp execution
🎯 Consistent but slow growth
CMP ₹1,037.95 gives it room to run if and only if FY26 sees:
- Double-digit volume recovery
- Export traction
- Pricing discipline
Until then? Solid portfolio stock. Just not the headline act.
Author: Prashant Marathe
Date: May 24, 2025
