Indigo Paints Limited, founded in 2000 and headquartered in Pune, is one of India’s fastest-growing decorative paint companies. Known for its innovative products and strong brand presence, Indigo offers a diverse range including emulsions, enamels, primers, and waterproofing solutions. The company emphasizes differentiated offerings, digital marketing, and sustainability, with a robust distribution network across Tier II and III cities.
In this article we are going to discuss the summary of the management commentary that was delivered on Q4FY25 performance.
Market Environment Overview
- The FY25 was a challenging year with sluggish demand across the paint industry and the broader consumer sector.
- Despite the muted topline growth, Indigo Paints has achieved strong profitability.
- In Q3 company had reported negative growth on a Yon-Y basis. During Q4 it has returned to positive growth albeit at a very modest 0.3%. However, the profit growth was significantly superior.
Financial Highlights
Standalone Financials
| Particulars | Q4 FY25 | Q4 FY24 | YoY Change | FY25 | FY24 | YoY Change |
|---|---|---|---|---|---|---|
| Revenue | ₹387.6 Cr | ₹386.5 Cr* | +0.3% | ₹1,277.2 Cr | ₹1,254.6 Cr | +1.8% |
| Gross Margin (%) | 47.4% | – | – | – | – | – |
| EBITDA | ₹85.9 Cr | ₹82.3 Cr | +4.4% | ₹231.6 Cr | ₹232.7 Cr | -0.5% |
| EBITDA Margin (%) | 23.4% | 22.5% | +90 bps | 18.1% | 18.5% | -40 bps |
| PAT | ₹56.9 Cr | ₹53.5 Cr | +6.3% | ₹143.9 Cr | ₹146.7 Cr | -1.9% |
| PAT Margin (%) | 15.3% | 14.5% | +80 bps | 11.1% | 11.7% | -60 bps |
Consolidated Financials
| Particulars | Q4 FY25 | Q4 FY24 | YoY Change | FY25 | FY24 | YoY Change |
|---|---|---|---|---|---|---|
| Revenue | ₹387.6 Cr | ₹384.9 Cr* | +0.7% | ₹1,341 Cr | ₹1,305 Cr | +2.7% |
| EBITDA | ₹87.9 Cr* | ₹85.1 Cr* | +3.3% | ₹233.5 Cr | ₹238.1 Cr | -1.9% |
| EBITDA Margin (%) | 22.6% | – | – | 17.4% | 18.2% | -80 bps |
| PAT | ₹56.6 Cr* | ₹53.7 Cr* | +5.4% | ₹145.2 Cr* | ₹147.6 Cr* | -1.6% |
| PAT Margin (%) | 14.6% | – | – | – | – | – |
Standalone Q4 FY25 vs Q4 FY24:
- Sales: +0.3% YoY
- Gross margin: 47.4% (industry-leading)
- EBITDA: ₹85.9 Cr (+4.4%), margin at 23.4% (record high)
- PAT: ₹56.9 Cr (+6.3%), PAT margin improved to 15.3%
Standalone FY25:
- Revenue: ₹1,277.2 Cr (+1.8%)
- EBITDA: ₹231.6 Cr (-0.5%), margin: 18.1%
- PAT: ₹143.9 Cr, margin: 11.1% (down slightly)
Consolidated FY25:
- Revenue: ₹1,341 Cr (+2.7%)
- EBITDA: ₹233.5 Cr (-1.9%)
- EBITDA Margin: 17.4% vs 18.2% in FY24
- Apple Chemie (subsidiary): +8.3% growth in Q4, margin impacted but improving
Operational Highlights
- The focus now in the company is more on digital outreach to its target audience which includes not only the end users but also the influencers.
- company have also intensified our BTL marketing activities, that is ‘Below The Line’ marketing activities to better track and promote secondary sales from the dealer counters.
- The company continue to punch above its weight with a 6.4% allocation of top line going towards A&P activities which is far above the industry spends.
Product Category Performance:
- In the previous quarter that was Q3 of FY25, all the paint categories had degrown. However, during the current quarter the quarter just gone by which is Q4 of FY25, the volume growth has picked up in the enamel category and in the primer distemper category.
- Though the volume growth in the emulsion category was mildly negative, the value growth was positive at 1.3%, which is a clear indication of the steady premiumization of our product portfolio.
- If you look on a full-year basis, the value and volume growth have registered positive growth across all categories except for the putty category which has witnessed a very small 1.3% value decline.
CAPEX:
- The company is setting up both water-based and solvent-based paint plants in Jodhpur.
- While the water-based plant has faced construction delays and is now expected to be operational in Q3 FY26, the solvent-based plant and putty plant expansion are on track to be completed by end of Q1 or early Q2 FY26.
- These delays are not expected to impact sales due to sufficient existing capacity. Meanwhile, waterproofing and construction chemicals continue to perform well, contributing a healthy mid-single-digit share to overall revenue.
Sustainability Initiatives
- The company has installed rooftop solar panels at its Pune head office and recently completed installation at its Cochin factory, pending regulatory approvals.
- The company also launched the Indigo Seva Utsav initiative, through which it has partnered with painters and local communities to paint over 150 government schools in Tier II and Tier III towns across India.
On the CSR front
- The company continues to support education for underprivileged girls around Pune, with over 300 beneficiaries to date. Its Painter Health Benefit Program, launched in Bihar in FY24, now covers 25,000+ painter families nationwide.
- In FY26, the company introduced the Indigo Skill Up Program to enhance painters’ business skills. A ₹3.50 per share dividend has been proposed for FY25. With demand improving and raw material costs softening, EBITDA margins are expected to rise in FY26, aided by a better product mix.
Question and Answer Session Highlights
Indigo Paints was growing faster than the industry till Q2 FY25, but in Q3–Q4, Berger Paints grew 6–7% faster. Why has your growth lagged recently, despite a strong presence in Tier III and IV towns? Is Kerala a major factor?
- All paint companies (except the market leader) have regional strengths and weaknesses.
- Demand recovery is not uniform across India. Q3 was the weakest for everyone; Q4 saw mild recovery.
- Indigo’s growth rate for FY25 is roughly on par with Berger’s, though not higher as in earlier quarters.
- Kerala, which forms ~25% of Indigo’s business, has seen muted or flat demand, impacting overall performance.
- Berger has strongholds in Eastern India, where recovery has been stronger recently, likely aiding their growth.
- Indigo still outperformed the industry average, even if not ahead of Berger in Q3–Q4.
- As demand stabilizes across regions, Indigo expects to regain its growth leadership among peers.
Which specific states are contributing more to the slowdown in your growth? Is South India, especially Kerala, a key factor?
- Kerala has indeed been a challenging market; most paint companies have de-grown there.
- Indigo has held steady in Kerala compared to FY24, with flat growth (+/-1%).
- Since Kerala is a significant market for Indigo, its recovery is critical to overall growth improvement.
- Berger Paints is very strong in Eastern India, where demand recovery has been faster, which may explain their better recent performance.
- While Berger has executed well recently, Indigo expects that as demand normalizes across regions, its growth advantage will re-emerge compared to peers.
Indigo Paints previously grew 2–3x faster than the industry, driven by increased field presence and the waterproofing business. To resume this pace from Q2 or Q3 FY26, are you taking any proactive steps, or will growth rely mainly on overall industry recovery?
- Yes, Indigo remains committed to its goal of growing 2.5x to 3x faster than the industry, and that objective hasn’t changed.
- Proactive steps being taken include:
- Incremental increase in feet-on-street, especially business development officers who engage contractors and painters to boost secondary sales.
- Focus on premium emulsions, where value growth is outpacing volume growth, indicating successful premiumization.
- A renewed push to expand the dealer network, which had slightly declined (from 18,700 in Q2 to 18,370). Excellent progress has been made in the past 2 months.
- Accelerated deployment of tinting machines, which had slowed due to weak demand but is now picking up again.
- These actions, combined with improving market sentiment, are expected to help restore Indigo’s high-growth trajectory in upcoming quarters.
With raw material prices softening, major players like Asian Paints and Berger have given better margin guidance. Doesn’t this also allow new entrants to get more aggressive? Also, a new entrant claims 10% market share by including both paint and putty—how do you view competitive intensity, particularly around trade margins and incentives?
- The new entrant has historically been strong in putty, and including that in their paint market share claim is misleading, as it’s a separate entity within their group.
- Indigo has never been overly concerned about this new player. Despite fears of disruption over the last 4 years, industry gross margins have not materially contracted, indicating limited real impact.
- Even if the new entrant offers 10–12% higher discounts, this hasn’t significantly affected established players’ margins.
- The real pressure on margins has been due to weak demand, not increased competition.
- In response, companies—including Indigo—have offered slightly higher trade discounts, but this has been a temporary measure.
- Indigo’s gross margin declined only ~1.5%, while EBITDA margins dropped by less than 0.5%, thanks to improved freight efficiency and product premiumization.
- With demand recovery underway and raw material prices continuing to ease, Indigo is already moderating discounts, and expects a gradual improvement in gross and EBITDA margins going forward—likely to be mirrored across the industry.
Why do the debtor days seem to have come down, but receivables have gone up? Does this mean the working capital looks stretched year-end?
The calculation of debtor days should not be based on total sales for the entire fiscal year, since sales are not uniform throughout the year. Our Q4 sales are much heavier. We calculate debtor days by dividing receivables by sales from the last 40-45 days of the period and annualizing it. By this method, debtor days at year-end (March 31) were 32 days, same as last year.
Has there been any significant change in inventory levels?
Inventories have marginally decreased. Finished goods inventory days dropped from 60 to 56-57 days, and raw material inventory days decreased from 36 to 29 days.
What about the payables days?
Payables days have also reduced from 60 days to 55 days.
Overall, has the working capital position changed significantly year-on-year?
No, there is no significant change in the working capital position compared to last year.
You mentioned demand has been improving. Can you give an indication of how the year might play out? Will Indigo Paints return to double-digit revenue growth, or is that challenging?
It doesn’t look challenging. We expect to return to double-digit growth as demand improves. Predicting whether this will happen in Q1 or Q2 is difficult, as we are assessing month by month, with each month showing slight improvement year-on-year.
What factors might affect this growth, especially in the near term?
Two main factors have slightly disrupted growth expectations for May:
- The monsoon arrived about 10 days earlier than usual, which typically reduces painting activity since monsoon usually starts in early June.
- Recent geopolitical tensions near the northern border (Jammu & Kashmir, Punjab, Haryana, Delhi, Himachal, northern Rajasthan) caused migrant laborers, who are crucial for painting work, to leave for their native villages temporarily, slowing activity in that region.
What is your outlook for Q1 and Q2 revenue growth?
We expect Q1 growth to be significantly better than Q4. If the current positive trend continues, we anticipate returning to strong double-digit revenue growth by Q2.