Indigo Paints bets on top-line growth over margins to win share

Indigo Paints Ltd is putting growth ahead of margins as it steps up spending to win market share in India's increasingly competitive paints market. Managing director Hemant Jalan is targeting more than 25% annual revenue growth if the industry expands at 13-14%.

The paint maker, which has about 3% of India's decorative paints market, does not have a fixed market-share target. Instead, it aims to grow at least 10 percentage points faster than the industry, a pace Jalan said would allow it to steadily gain share.

"What is more important for a company of our size is to grow the top line aggressively," Jalan said in an interview with Mint. "We are not very concerned about a 1 or 2% movement in the gross margin in either direction."

That means Indigo Paints is prepared to accept some pressure on margins as it spends more on trade promotions and influencers. The company reported a gross margin of 44.6% in the April-June quarter of FY27, compared with an industry average of 41.5%, according to its recent investor presentation.

The shift comes as competition remains intense and paint makers navigate sharp swings in raw material prices. Indigo Paints had cut its marketing expenditure in the June quarter to conserve capital amid extreme volatility in raw-material prices and uncertainty over supplies. Its advertising and promotion spend fell to 4.3% of revenue from 6.8% in the year-earlier quarter.

Jalan said the money saved will be reinvested in subsequent quarters, with advertising and promotion spending for the full year expected to exceed last year's level.

The company is also looking beyond its traditional decorative paints portfolio to fuel growth. It is pushing into wood coatings and evaluating categories such as auto refinish, while its waterproofing business has already become a significant part of turnover following its acquisition of 51% stake in Apple Chemie India Private Limited two years ago. Last week, Indigo announced that it has increased its stake in the company to 62%.

Indigo Paints is also open to industrial coatings, although Jalan said any entry would likely have to come through an inorganic opportunity.

Jalan said the company is not looking to raise equity to fund its expansion, despite stepping up investments in growth.

The strategy comes as competitive intensity remains high, particularly with Birla Opus continuing to offer deep discounts. Jalan said the new entrant's sales appear to have plateaued and that incumbent paint makers have not followed its discounting strategy.

"Price war between paint companies was actually never there," he said.

Jalan also cautioned against judging paint makers' profitability based on a single quarter, given the sharp swings in raw-material prices in recent months. He expects margins to normalize once the impact of high-cost inventory works through.

For Indigo Paints, around 30% of sales come from highly differentiated products where the company has created a category and earns high margins, providing support to its overall gross margin.

"We model Indigo Paints to maintain industry leading growth led by market share expansion in FY27-28," analysts at ICICI Securities wrote in a note dated 14 August. The company's strategy to increase expenditure on trade channels could likely strengthen its position in the market, they said.

For consumers, however, relief on paint prices may take longer. Jalan does not expect industry-wide price cuts before Diwali, although a reduction could follow if raw-material prices remain stable.

Jalan said Indigo Paints' biggest disadvantage compared with larger peers such as Asian Paints and Berger Paints is its relatively smaller scale and younger brand. While these companies have been in the market for around a century, Indigo Paints has existed for about 25 years, with serious brand-building efforts beginning only in the last 12 years, he said.

The company was also bootstrapped and did not have access to external financing during its first 15 years, limiting its ability to spend aggressively on building the brand.

"The size, scale, or the lack of... even though we are now a well-known brand, of course, the brand equity cannot match that of companies that have existed for 100 years," Jalan said.

Jalan, 68, said the company has been planning succession and that he has already stepped back from day-to-day operations, working only on strategy. Indigo Paints is building its next layer of leadership and could formally announce a chief executive officer–a post currently vacant–in the coming 12-18 months, he said.

Jalan himself plans to remain actively involved with the company "as long as my health permits," he said. His son, Parag Jalan, a non-executive director on the company's board, does not intend to take up an executive role.

The growth push comes as Indigo Paints' stock has lagged the broader market since the beginning of 2026. The stock has lost over 3% during the period, compared with an over 4% decline in Asian Paints and a fall of nearly a tenth in the benchmark Sensex. The scrip traded at ₹1,147.95 on the BSE in early deals on Wednesday.