Indigo Paints delivered the fastest growth in the industry in the first quarter of the fiscal with sales growth at three times the industry rate in the April to June quarter and aims to sustain the same, CMD Hemant Jalan said on August 8.

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“Last year we announced a renewed strategy to focus on the larger cities as opposed to our erstwhile focus on the smaller towns. Sometimes it takes a few quarters for the results to start manifesting. Happy to see that we are getting our mojo back and returning to where we were, not just 2x the industry growth, but maybe more than 3x the industry growth…we need to sustain it for a few quarters,” he told CNBC-TV18.

Jalan said Indigo Paints’ market share is still very small, around 2.5 percent and therefore, the headroom to growth is huge. “We would like to catch up with the big boys in the industry. In this industry, nothing is going to happen overnight, it is going to take time,” he said.

However, he highlighted that growing at the cost of margins has never been the printmaker's strategy. The results for the last eight to ten quarters show that gross margins have always been the highest in the paint industry, even higher than the industry leader by a very wide margin, he said.

He added that his firm’s EBITDA margins are also close to being the second best in the industry and so also PAT margins. “So, growth at the expense of profitability is never in our DNA and I do not think we intend to pursue that course,” he said.

His remarks come a day after the company reported the fastest revenue growth rate of 29 percent in the paints industry for the June quarter of 2023-24 boosted by its focus on Tier 1 and 2 cities. Its revenue came in at Rs 288.1 crore for the first quarter compared to Rs 223.9 crore in the year-ago quarter.

Its larger rival Asian Paints has reported a seven percent growth while Kansai Nerolac posted a five percent.

Indigo Paints’ gross margins improved to 47.3 percent in the June quarter from 45.2 percent in the year ago period. The company’s earnings before interest tax depreciation and amortisation (EBITDA) soared 39 percent to Rs 49.1 crore on a year-on-year basis. Its EBITDA margin also improved to 17 percent in Q1 from 15.8 percent last year.

The profit after tax jumped 58 percent year-on-year to Rs 31.51 crore during the quarter from Rs 19.94 crore in the first quarter of the previous fiscal.

Sales growth in Tier-1 and 2 cities was ahead of Tier-3 and 4 and rural areas, the firm said.

The company has started work on a new water-based paint plant at Jodhpur of 90,000 KLPA capacity. It is also implementing a solvent-based paint plant at Jodhpur of 12,000 KLPA.

Indigo Paints shares have rallied more than 73 percent from its 52-week low of Rs 981.05 hit on March 28, 2023, to touch nearly one-year high levels. The stock hit a high of Rs 1,700 on Tuesday, just 1.78 percent down from the 52-week high hit on August 26, 2022.

Indigo Paints shares were trading half a percent higher at Rs 1621.25 apiece on BSE at 12:08 pm.