Going ahead, the brokerage believes that Indigo Paints will continue to outpace its peers given low base and penetration opportunities.
NDTV Profit's special research section collates quality and in-depth equity and economy research reports from across India's top brokerages, asset managers and research agencies. These reports offer NDTV Profit's subscribers an opportunity to expand their understanding of companies, sectors and the economy.
Dolat Capital Report
Indigo Paints Ltd.'s Q3 FY25 revenue below, Ebitda in line and adjusted profit after tax were ahead our estimates. Revenue de-grew by 4.0% due to sluggish consumer demand. However, performance was still better compared to leader i.e. Asian Paints (-7.8%). Management is optimistic that a rebound in demand could drive growth back to double digits.
Gross margin contracted by 130 bps to 47.2% due to price reduction in H2 FY24 and change in product mix. Additionally, Ebitdam contracted by 30bps which was better than Asian Paints (-340bps) and Kansai Nerolac (-50bps). However, the company expects a sequential improvement in Ebitda margins in Q4 FY25E.
We have downward revised our FY25/26/27E EPS by 8.2/8.1/7.8% to Rs 29.2/37.6/46.5 to factor in Q3 performance. Going ahead, we believe that Indigo Paints will continue to outpace its peers given low base and penetration opportunities.
Valuing the stock at 30 times FY27E EPS, we arrive at target price of Rs 1,394 (Rs 1,664 earlier). Considering the recent fall in stock price, we upgrade to ‘Accumulate' rating.
Click on the attachment to read the full report:
DISCLAIMER
This report is authored by an external party. NDTV Profit does not vouch for the accuracy of its contents nor is responsible for them in any way. The contents of this section do not constitute investment advice. For that you must always consult an expert based on your individual needs. The views expressed in the report are that of the author entity and do not represent the views of NDTV Profit.
Users have no license to copy, modify, or distribute the content without permission of the Original Owner.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
