Introduction
As per the report, the Indian paints and coating industry is currently valued at around Rs. 62,000 Crores or USD 8 billion and is expected to surpass the mark of 1 Lakh Crore (USD 14 billion) by 2028 with a CAGR of 9.38% during the forecast period (2023-2028).
The rise in the infrastructural and industrial activities in the country are the major reasons contributing to the growth of the industry along with the increasing standard of living. According to Ashok Kumar Gupta, President, Indian Paint Association and MD, Shalimar Paints, there is a strong correlation between the industry’s growth and the GDP growth of the nation. Therefore, as the nation’s GDP flourishes, Indian paints industry is set to achieve milestones.
Some of the top paint companies in India are Asian Paints, Berger Paints, Kansai Nerolac Paints, Akzo Nobel (Dulux) Paints, and Indigo Paints. This article features a comprehensive business case study between the two leading paint companies, Asian Paints vs Indigo Paints based on their market presence as well stock performance. Beginning with the quick stock prices overview and company description, the article brings out a detailed stock performance comparison. In the end, experts call is also given to help you make better long-term investment decisions.
ASIAN PAINTS VS INDIGO PAINTS: STOCK PRICE OVERVIEW
As of June 16, Asian Paints is trading at a price of ₹3,316.85 which is more than double the price of Indigo Paints, which is around ₹1418.05. Talking of yearly performances, Asian Paints showed a promising rise of 24% from the previous year while Indigo Paints is nearly the same as the last year or a meagre 0.2% down. In terms of YTD (Year-to-date) returns, both the stocks are neck to neck with each other as the former is around 8.12% up while the latter is also 8.05% up.
Per the latest updates, Asian Paints consolidated net profit rose 45% YoY to ₹1234 Crore in Q4 of FY22-23 which was around ₹850 Crore in the same quarter of the previous year. Indigo Paints also generated a net profit of ₹131.94 crores in 2023, a huge 57% rise from its previous year’s profit of 84.05 crores.
ASAIN PAINTS VS INDIGO PAINTS: COMPANY DESCRIPTION
ASIAN PAINTS
Asian Paints was founded by 4 Gujarati friends in 1942 and was incorporated under the name of Asian Oil and Paint Company Pvt. Ltd. in 1945. However, it was later changed to Asian Paints (India) Pvt. Ltd. in 1965. It is the oldest and the biggest paints and coating manufacturer in India by market share with over 26 manufacturing facilities in 16 countries. The company along with its subsidiaries manufactures and sells decorative paint products such as interior and exterior wall paints, tile waterproofing solutions, varnishes, enamels, adhesives, and painting tools. The company also deals in products and services related to home décor and bath fittings such as sinks, washbasins and toiletries.
Basic Info
- Company Name: Asian Paints Ltd.
- Headquarters: Mumbai, Maharashtra
- Year: 1945
- Managing Director: Amit Syngle
- NSE Symbol: ASIANPAINT
- Market Cap: ₹3,18,151 Cr
INDIGO PAINTS
Indigo Paints is an Indian paint company headquartered in Pune, Maharashtra manufacturing, selling, and distributing decorative paints, emulsions, putties, distempers, primers, wood coatings, and cement paints. It was founded by Mr Hemant Jalan in 2000 and initially produced cement paints. However, the company scaled and grew to become the fifth-largest company by market share. The company has three manufacturing plants across the country situated in Jodhpur, Kochi, and Pudukkottai and has a distribution network across all the Indian states and UTs.
The company launched its IP0(Initial Public Offering) on Jan 20, 2021, which was valued at around 1170 crores. To everyone’s surprise, it was oversubscribed 117 times and was listed on NSE and BSE at a price of ₹2,607.5, a 75% premium from its issue price of ₹1490. The company also raised ₹348 crores from 25 top investors like the Government of Singapore, Fidelity, Goldman Sachs, HSBC, SBI Mutual Fund and Axis Mutual Fund as a part of its IPO.
Basic Info
· Company Name: Indigo Paints Ltd.
· Headquarters: Pune, Maharashtra
· Year: 2000
· Managing Director: Hemant Jalan
· NSE Symbol: INDIGOPNTS
· Market Cap: ₹6,748 Cr
ASIAN PAINTS VS INDIGO PAINTS: DETAILED STOCK COMPARISON
Revenue
Revenue, in general, is the money obtained by carrying out business operations.
*All values are in Rs. Cr
| March 23 | March 22 | March 21 | March 20 | March 19 | |
| ASIAN PAINTS | 34,488 | 29,101 | 21,712 | 20,211 | 19,240 |
| Revenue YoY Growth in % | 18.51% | 34.03% | 7.42% | 5.05% | 15.44% |
| INDIGO PAINTS | 1,073.33 | 905.97 | 723.32 | 624.79 | 535.63 |
| Revenue YoY Growth in % | 18.47% | 25.25% | 15.77% | 16.64% | 29.29% |
On comparing the revenue of Asian Paints vs Indigo Paints, Indigo Paints has given a CAGR of 21.08% over the last five years against the 16.09% of Asian Paints. However, both companies look great in terms of revenue and hence can be an investment choice for the long term.
Net Profit
Profit is the sum of money left after expenses like operations, raw materials, sales, and distributions.
*All values are in Rs. Cr
| March 23 | March 22 | March 21 | March 20 | March 19 | |
| ASIAN PAINTS | 4,101 | 3,053 | 3,178 | 2,728 | 2,173 |
| Profit YoY Growth in % | 34.32% | -3.93% | 16.49% | 25.54% | 12.56% |
| INDIGO PAINTS | 131.94 | 84.05 | 70.85 | 47.81 | 26.87 |
| Profit YoY Growth in % | 56.97% | 18.63% | 48.19% | 77.93% | 945.52% |
Considering the data over the last 4 years, Indigo Paints has been generating significantly more profits than Asian Paints. The large business network and increasing costs of raw materials have affected the profit growth of Asian Paints. However, the profit figures are still enormously large for Asian paints.
P/E Ratio
P/E Ratio or Price-to-Earning ratio is an important parameter for the fundamental analysis of a stock. The P/E ratio is obtained by dividing the share price by its EPS.
Industry P/E: It is the average value of the P/E ratio of all the companies present in the industry. A company with a P/E ratio lower than industry P/E is considered undervalued and hence, can be a good investment option.
| P/E Ratio | Industry P/E | |
| ASIAN PAINTS | 77.48 | 71.89 |
| INDIGO PAINTS | 51.14 | 71.89 |
Asian Paints is slightly overvalued in comparison with Indigo Paints, as it has more PE than the industry average. However, the increasing price of Asian Paints is a plus point here.
P/B Ratio
P/B Ratio or Price-to-Book ratio is the ratio of share price to its book value. The book value of a share is usually the amount of money a shareholder will receive if the company has liquidated or cleared all its dues. A stock with a P/B ratio under 1 is considered to be an ideal one.
| P/B Ratio | Book Value | |
| ASIAN PAINTS | 19.90 | ₹166.73 |
| INDIGO PAINTS | 10.43 | ₹135.99 |
Indigo Paints has a lower P/B value making it economically feasible for investment. However, Asian Paints has a higher book value.
EPS (Earning Per Share)
EPS is the ratio of the net profit of the company to the total number of outstanding shares. EPS defines how much a company can make from each of its shares.
| 2023 | 2022 | 2021 | 2020 | 2019 | |
| ASIAN PAINTS | ₹42.76 | ₹32.68 | ₹31.82 | ₹27.67 | ₹22.23 |
| INDIGO PAINTS | ₹27.67 | ₹17.67 | ₹15.55 | ₹10.50 | ₹5.90 |
As a result of its higher pricing, Asian Paints has more EPS than Indigo.
ROE & ROCE
ROE (Return on Equity): ROE is an excellent parameter as it measures the decision-making ability of a company, i.e., how well it manages its investor’s money.
ROCE (Return on Capital Employed): ROCE defines the ability of a company to properly utilize capital (both debt and equity).
| ROE | ROCE | |
| ASIAN PAINTS | 28.38% | 38.50% |
| INDIGO PAINTS | 13.89% | 19.06% |
Asian Paints leads significantly both in terms of ROE and ROCE.
SHAREHOLDING PATTERN
The shareholding pattern or SHP of a company gives the details about the investors of the company, i.e., promoters and non-promoters.
| SHAREHOLDERS | ASIAN PAINTS | INDIGO PAINTS |
| PROMOTERS | 52.63% | 53.98% |
| FOREIGN INSTITUTIONAL INVESTORS(FII) | 17.02% | 8.8% |
| DOMESTIC INSTITUTIONAL INVESTORS(DII) | 10.01% | 3.2% |
| PUBLIC | 20.32% | 33.99% |
| OTHERS | 0.02% | 0.03% |
Conclusion
Indian paints industry is the fastest growing paints industry in Asia, making it a favourable sector for long term investments. According to experts at firms like Axis Securities and HDFC Securities, Asian Paints is the top choice among paint companies as it has given consistent growth. Some of its recent acquisitions like Weatherseal (Doors & Windows) and White Teak (Lighting) will also add to its revenue and hence will increase its market share. Talking of Indigo paints, which is more than 50% down from its all-time high, experts predict it can show an uptrend and can be a good choice for the short term.
