Indigo Paints Ltd a newly listed paint company Stock in the Indian stock market 2021 February has got the first buy recommendation from the Expert.
Indigo Paints Ltd is engaged in the manufacturing and sale of decorative paints and operates its manufacturing facilities in Jodhpur, Kochi and Pudukkottai. Indigo Paints Ltd is the fifth largest decorative paint company in India.
Indigo Paints Ltd Established in the year 2000, Its product portfolio includes emulsions, enamels, wood coatings, distempers, primers, putties, and cement paint.
Despite being a late entrant to this industry with high entry barriers, Indigo paints ltd has been able to create its presence in the market through its multi-pronged strategy of introducing differentiated products, high ad spending focusing on the rural markets, and increasing the penetration of tinting machines.
The company has a presence in 27 States and 7 Union Territories with a distribution network of more than 14,700 dealers.
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Indigo paints Ltd stocks future growth outlook.
Indigo Paints is the only new entrant in the last two decades to have successfully overcome these high barriers with its patient and multi-pronged strategy, which comprises:
Introducing differentiated products to distinguish itself in the market
It focuses on niche and differentiated products. Purposefully building a distribution network via rural markets: Indigo Paints initially focused on Tier II to Tier IV towns and villages instead of metros and Tier I cities – where the large incumbents have a strong presence in distribution and penetration of tinting machines. This made it easier to onboard dealers. This approach of first building a foothold in the smaller markets and thereafter progressing to the larger cities requires considerable patience. It currently has a dealer network of 14,700+ dealers and is rapidly adding new dealers.
Creating brand equity through high investments in ads
The Top 4 companies have created strong brand equity over the years by spending 6% of sales on A&P. Indigo Paints is also investing significantly 13% of sales towards building its brand.
Rapidly driving the penetration of tinting machines within its dealer network
It aims to become the preferred brand among dealers and improve the throughput per outlet. It has added 6,400 tinting machines, penetrating 43% of its dealer network.
Engaging with influencers, Painters and contractors to build trust
Along with offering financial incentives, INDIGOPN also conducts blind tests with influencers to gain their trust.
Indigo Paints Ltd Stock Recommendation.
The Indigo Paints industry offers an attractive opportunity on account of the low per capita consumption of paints, urbanization, and the shortening of the repainting cycle. Coupled with the oligopolistic nature of the industry, this means that the incumbents have strong growth runways.
Indigo Paints has gradually, but successfully, managed to breach the barriers to gain entry into the Paints industry on the back of its patient, multi-pronged strategy. It has grown faster v/s peers and has been chipping away an increasing share of the industry profit pool.
Indigo Paints has just a 2% market share in the Indian paint industry. Indigo Paints has an immense opportunity to grow by increasing its distribution reach as well as the throughput per dealer.
We expect Indigo Paints to continue to outperform larger peers in the industry, aggression by larger players in the rural markets could put the brakes on Indigo Paints’ growth aspirations.
At the same time, greater acceptability in the urban markets would be crucial to Indigo Paints’ ambitions of achieving scale.
Strong topline and earnings growth outlook, We have to buy recommendation on the stock.
Indigo paints Ltd stock Target Price.
We Initiate buy recommendation on the Indigi Paints Stock with a Target Price of 3000, The current market price of the stock is Rs 1950.
Last year February Indigo paint ltd stock was listed in the stock market at Rs 3117. after the stock has been gone a decent correction and made a low of Rs 1914.
The investor can now look at this stock for great investment opportunities for long term wealth creation.
Recently Big brokerage firm Motilal Oswal Ltd Initiated coverage on the Indigo Paints Stock with a buy recommendation.
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