Indigo Paints (INDIGOPNTS) Q1 24/25 earnings summary

Executive summary

• Achieved industry-leading consolidated revenue growth of 7.8% year-over-year for Q1 FY25, with standalone revenue up 6.1%, marking the fifth consecutive quarter of outperformance despite subdued market conditions.

• Profitability was impacted by industry-wide price cuts, higher employee costs, and increased depreciation from the commissioning of the new Tamil Nadu plant.

• Subsidiary Apple Chemie posted robust 47% year-over-year growth and received NABL accreditation, contributing significantly to consolidated growth.

• Continued investment in brand building and digital outreach, with A&P expenses remaining high relative to peers.

Financial highlights

• Consolidated revenue for Q1 FY25 reached INR 311 crores, up 7.8% year-over-year; standalone revenue was INR 293.9 crores, up 6.1%.

• Gross margin slightly decreased from 47.6% to 47.0% due to price cuts and higher channel discounts.

• EBITDA margin dropped from 17.2% to 15.6% year-over-year, primarily due to a 23%-24% increase in employee costs.

• PAT declined from INR 31.3 crores to INR 26.5 crores, mainly due to higher depreciation from the Tamil Nadu plant.

• Advertising and promotion spend as a percentage of revenue decreased from 7.6% to 7.2%.

Outlook and guidance

• Expects to continue outpacing industry growth and return to double-digit growth as underlying demand strengthens.

• Margins anticipated to expand with price hikes and festive season demand in Q3 FY25.

• High sales growth observed in July, with optimism for continued improvement, supported by recent industry price hikes of about 2%.

• Aim to increase waterproofing segment contribution to 8%-10% of top line within 1-1.5 years.

• Apple Chemie expected to sustain high revenue growth with expanded sales and marketing.