Indigo Paints saw a stellar debut, with the stock listing at an over 80 percent premium to its issue price. Hemant Jalan, MD, Indigo Paints discussed about the listing and his outlook for the business going forward.
“Even when we were unlisted, we were very much on the radar of all the large paint players. But I think there is a limited amount that any large player can do to stop the growth of somebody who is executing his plans well. I don’t think it bothers them too much at this stage. We are very small compared to their scale of operations. So our growth is coming at the expense of their growth numbers,” he said.
“It is a huge industry. I don’t think we disturb anyone’s status quo when we grow at a faster pace. That has been happening over time and I am pretty confident that will continue to happen,” he mentioned.
“When investors look at companies with high growth potential which are relatively small in size compared to the industry in which they operate, I think they look at P/E multiples not one year or two years down the road, they look at 4-5 years down the road which is the correct way to analyse a company like that,” he said.
According to him, Grasim will take 2-3 year of the gestation period for its plants to come onstream in the paints industry.
“After that building a network in this particular industry is not something that happens overnight,” he said.
He sees a lot of scope of margin expansion. “As far as margins are concerned, we do think that we have a long way to go for operational leverage to start stabilising. I see the profitability, by and large, moving in a northward direction year-on-year (YoY) perhaps faster than competitors.”
In terms of market share aspiration, he said, “We would like to grow at about 30-35 percent on a YoY basis. If we do that, we grow by about 80 percent in two years’ time. So maybe in two years’ time we should be roughly 3-3.5 percent market share or thereabouts.”
For entire conversation, watch the video