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    Raw material costs plateauing; may ease in 2 months: Indigo Paints’ MD

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    Raw material costs plateauing; may ease in 2 months: Indigo Paints’ MD

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    After a steep rise over the past five months, prices of raw materials for paint are showing signs of plateauing, Hemant Jalan, MD of Indigo Paints said in an interview to CNBC-TV18. Jalan said that Indigo, however, has been able to pass on 50 percent of input spike to consumers.

    After a steep rise over the past five months, prices of raw materials for paint are showing signs of plateauing, Hemant Jalan, MD of Indigo Paints said in an interview to CNBC-TV18.
    “I think it (the rise in prices) has less to do with crude and more to do with various international large plants making monomers for emulsions that suffered outages and declared force majeure,” Jalan said.
    “Prices for the monomers for emulsions have shot through the roof. It started in October and it has continued till now. We now see some plateauing out of that and it is expected that in another 2 months or so they will start a downward trajectory,” he said.
    Jalan said that Indigo, however, has been able to pass on 50 percent of input spike to consumers.
    “At Indigo Paints, we started increasing prices of our finished products starting from mid-November. We increased them in tranches, for certain set of products we went for a price increase on November 16 just after Diwali and for different sets of products we have been incrementally increasing prices in December, January, and February. So, I would say that we have been able to pass on at least 50 percent of our raw material price hike to the customer as yet,” he said.
    He said that Q4 gross margins have been under pressure. However, he expects it to start recovering from Q1 next year. He also expects to see some expansion in operating profit margin this year as well as in the next.
    “We do expect growth in our EBITDA margins,” he said.
    “We did 14.6 percent EBITDA margins in the last fiscal and we had indicated during our roadshows in the IPO and whatever interactions we had with the press that we do expect to see some EBITDA margin expansion this year and in the years to come,” he said.
    Jalan said demand has been robust since June last year. However, he said that there are some concerns because of the rising COVID numbers and restrictions in many places.
    The stock has come off by around 30 percent from its record high of Rs 3,348, but is still trading 50 percent above its issue price of Rs 1,490.
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