This Mid-Cap Paint Stock Rallies Over 15% on Friday; Motilal Oswal Advises Buying

Published 31-12-2021, 03:23 pm
© Reuters.
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By Malvika Gurung

Investing.com -- Shares of the paint company Indigo Paints Pvt Ltd (NS:INDG) have surged 10.5% to Rs 2,147.2 apiece at 3:00 pm on Friday, after rallying 15.7% to Rs 2,247 apiece earlier in the day.

The stock surge has come after the domestic brokerage firm Motilal Oswal (NS:MOFS) initiated a Buy call on the paint stock, setting a target price of Rs 2270/share, which is an upside of 6.5% compared to its current market price.

In an oligopolistic paint industry in the country, which is dominated by four major players, including Asian Paints (NS:ASPN) and Berger Paints (NS:BRGR), Indigo Paints is the only new entrant in the industry that has surpassed the high entry barriers of the Indian paints industry, using its patient and multi-pronged strategy, boosted by its differentiated products’ instruction to distinguish itself in the said market.

Doing so, the company has built a robust distribution network through rural markets, high volume investments in branding, and increasing engagement with contractors, states the brokerage report.

Motilal Oswal further estimates Indigo Paints to deliver a sales growth of 28%, an EBITDA growth of 35% and a rise in PAT by 41% until FY24. At the same time, it expects the Rs 545 billion Indian paint industry to grow 12.2% (CAGR) and volume growth of approximately 10% by FY24.

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