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Dolat Capital Report
Indigo Paints Ltd.'s Q3 FY23 revenue and Ebitda was below our estimate. This was primarily due to extended monsoon and early festive season. Revenue growth in Q3 FY23 was ahead of Asian Paints Ltd. (up 1.3%) and Kansai Nerolac Paints Ltd. (up 0.9%).
Revenue growth during the quarter from enamels and wood coating (up 14.6%) and primers and distempers (up 5.5%) was better compared to other segments.
Despite offering aggressive trade discounts as a result of softening in raw material prices, gross margin expanded 90 bps to 43.8%. However, Ebitda margin contracted 10 bps led by higher employee cost, better compared to Berger Paints India Ltd (down 240 bps) and Kansai Nerolac (down 100 bps).
Indigo's Q3 revenue, Ebitda and adjusted profit after tax performance was below our estimate. To adjust this, we have downward revised our FY23/24/25E estimates to Rs 24.2/28.7/37.3 representing 15/16/9% revision.
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