Indigo Paints Limited — Q2 FY26 earnings call

Indigo Paints reported a resilient Q2 FY26 with standalone revenue at INR298.5 crores, growing 3.5% YoY, and consolidated revenue at INR312.1 crores, up 4.2% YoY. Standalone EBITDA margin improved to 15.3% from 14.8% in Q2 FY25, while consolidated EBITDA grew 12.1% to INR46.5 crores. PAT also saw healthy growth, with standalone at INR25.5 crores (up 5.8%) and consolidated at INR25.2 crores (up 13.5%). For H1 FY26, consolidated revenue reached INR620.9 crores, a 1.7% growth, with EBITDA at INR90.8 crores (up 2.2%) and PAT at INR51.3 crores (up 4.9%).

The company noted growth picking up despite extended monsoons, with sales slowing in August but regaining momentum in September. A&P spending remained flat at 5.3% of revenue, focusing on below-the-line marketing. Emulsions achieved 7% value growth against 3.9% volume growth, indicating premiumization. The dealer network expanded to over 18,900 active dealers and more than 11,650 tinting machines as of September 30. Management highlighted strong fund inflow from dealers and unprecedented^🌐 painter token scanning in the last two months as positive indicators of secondary sales and demand.

Brownfield expansion of the putty plant at Jodhpur is complete, with trial productions underway. The new solvent-based plant (12,000 kiloliters per annum) is scheduled for commercial production early next month, and the water-based plant (90,000 kiloliters per annum) is expected to be commissioned late in Q4 FY26. The company stated no significant capex is expected for the next 3-4 years, with current capacity sufficient until FY29. ESG efforts include renewable energy adoption and community outreach, with over 50 government schools repainted and renovated.

Apple Chemie, the construction chemicals subsidiary, delivered strong growth in Q2 FY26, with revenues of INR13.6 crores, a 22.6% increase YoY. Gross margins improved due to optimized product mix. While Maharashtra remains the primary revenue driver, sales momentum is strengthening in Southern and Eastern regions. Management expects Apple Chemie's revenue to be in the range of INR200-300 crores in the next 3 years and its contribution to Indigo Paints' top line to reach double digits next year.

Management expressed optimism about a demand revival, citing strong collections, increased secondary sales, and painter token scanning. Favorable factors like a good monsoon, RBI rate cuts, and government tax reductions are expected to boost consumer sentiment. The company anticipates double-digit growth from Q4 FY26, outperforming the industry. They noted that while other players might see value growth lagging volume growth, Indigo Paints is experiencing the reverse, with value growth higher than volume growth, driven by premium products.

Addressing an analyst's question on quick commerce and making the painting process faster, management explained the inherent difficulties for paints. They cited bulkiness, low cost per weight making transport difficult, and the need for multiple ancillary products and professional advice. Attempts to sell paint online have been largely unsuccessful globally, reinforcing the preference for traditional dealer channels. However, they acknowledged that modern tools and spray painting are slowly being adopted by contractors, especially in more advanced markets like Kerala, which can shorten the painting cycle.