Indigo Paints Q2 Profit Falls 47% as Revenue Rises 15%

Indigo Paints Limited reported consolidated net profit of Rs 13.3937 crore for the quarter ended September 30, 2026, down 47.0% year on year, even as revenue from operations rose 15.0% to Rs 358.7505 crore. Indigo Paints attributed the profit decline to an unfavourable product mix and high-cost inventory, which reduced standalone gross margin to 38.5% from 45.1%.

Why did Indigo Paints' Q2 profit fall despite revenue growth?

Indigo Paints' Q2 profit fell because costs increased faster than revenue, reducing consolidated profit before tax to Rs 16.6563 crore from Rs 33.7657 crore a year earlier. Revenue from operations rose by Rs 46.6914 crore to Rs 358.7505 crore in the quarter ended September 30, 2026, while total expenses increased by Rs 62.9791 crore to Rs 344.2673 crore.

Raw-material consumption was the largest cost movement. Consolidated cost of raw materials and components consumed rose 35.4% to Rs 214.8616 crore from Rs 158.6589 crore, exceeding the 15.0% increase in revenue. Purchases of traded goods increased to Rs 10.2038 crore from Rs 8.0042 crore, employee benefits expense rose to Rs 36.8122 crore from Rs 31.1070 crore, and other expenses increased to Rs 69.7708 crore from Rs 62.0814 crore.

Management said an unfavourable product mix and raw-material cost headwinds from high-cost inventory carried from the preceding quarter affected the standalone business. Standalone gross margin contracted by 6.6 percentage points to 38.5% in the September 2026 quarter from 45.1% in the September 2025 quarter. Indigo Paints said the lower gross margin subsequently affected earnings before interest, tax, depreciation and amortisation, or EBITDA, margin and profit-after-tax margin.

How did Indigo Paints perform on a standalone basis?

Indigo Paints' standalone revenue from operations increased 14.1% to Rs 340.4845 crore in the quarter ended September 30, 2026, but net profit declined 45.9% to Rs 13.8080 crore. In the comparable September 2025 quarter, standalone revenue was Rs 298.5018 crore and net profit was Rs 25.5331 crore.

Standalone profit before tax fell to Rs 17.2336 crore from Rs 34.1364 crore as total expenses rose by Rs 58.1424 crore to Rs 325.2443 crore. Raw-material and component consumption increased to Rs 203.2475 crore from Rs 150.3869 crore, while employee benefits expense rose to Rs 33.9891 crore from Rs 28.7324 crore and other expenses increased to Rs 66.6741 crore from Rs 60.0292 crore.

Standalone EBITDA excluding other income was Rs 30.3 crore, down 33.8% from Rs 45.8 crore in the prior-year quarter, according to the press release. Other income was Rs 1.9934 crore, compared with Rs 2.7365 crore a year earlier, but the much larger rise in material costs accounted for the greater movement in profitability.

The sequential comparison also showed a sharp reduction in earnings. Standalone revenue was Rs 350.0454 crore in the quarter ended June 30, 2026, Rs 9.5609 crore above the September-quarter figure, while net profit was Rs 42.3653 crore, Rs 28.5573 crore above the latest quarter. The company specifically identified high-cost inventory carried from the previous quarter as a factor in the September-quarter gross-margin outcome.

What did Apple Chemie contribute to Indigo Paints' growth?

Indigo Paints said its 51%-owned subsidiary, Apple Chemie India Private Limited, recorded 35.3% growth in the September 2026 quarter, helping consolidated revenue grow faster than standalone revenue. Consolidated revenue was Rs 358.7505 crore, compared with standalone revenue of Rs 340.4845 crore.

Apple Chemie reported total revenue of Rs 18.3966 crore and profit after tax of Rs 15.31 lakh for the quarter ended September 30, 2026. For the six months from April 1, 2026 to September 30, 2026, the subsidiary reported revenue of Rs 38.0828 crore and profit after tax of Rs 5.84 lakh.

The subsidiary's quarterly profit was comparatively small against Indigo Paints' consolidated net profit of Rs 13.3937 crore. The group reports a single operating segment, manufacturing and selling paints and allied products, because it says products are interlinked and resources are allocated interchangeably. The filing therefore does not provide separate profitability by paint category or a segment-level profit split for Apple Chemie.

The consolidated results include the parent and Apple Chemie, while standalone results cover Indigo Paints alone. Price Waterhouse Chartered Accountants LLP issued an unmodified limited-review conclusion on the consolidated statement, including results of the subsidiary reviewed by another auditor. Apple Chemie's reported total assets were Rs 56.4950 crore and net assets were Rs 35.7765 crore as of September 30, 2026.

Did Indigo Paints' first-half profit remain higher year on year?

Indigo Paints' first-half consolidated profit remained higher year on year, although its growth rate trailed revenue growth. Revenue from operations for the six months ended September 30, 2026 rose 17.3% to Rs 728.4213 crore from Rs 620.9230 crore, while net profit rose 7.4% to Rs 55.0969 crore from Rs 51.3073 crore.

Consolidated EBITDA excluding other income increased 2.4% to Rs 93.0 crore from Rs 90.8 crore, according to the press release. The consolidated EBITDA margin was 12.8% and profit-after-tax margin was 7.4% in the first half. This compares with revenue growth of 17.3%, showing that additional sales converted into EBITDA and net profit at a slower rate during the six-month period.

On a standalone basis, first-half revenue increased 16.4% to Rs 690.5299 crore from Rs 593.3540 crore, while net profit increased 8.3% to Rs 56.1733 crore from Rs 51.8904 crore. Standalone gross margin was 41.9% for the first half, above the 38.5% recorded in the September quarter. Standalone EBITDA margin and profit-after-tax margin were 13.4% and 8.0%, respectively.

Cash generation was lower in the first half as inventory increased. Consolidated net cash inflow from operating activities was Rs 53.1319 crore for the six months ended September 30, 2026, compared with Rs 81.8944 crore a year earlier. Inventory rose by Rs 35.3691 crore during the period, taking consolidated inventories to Rs 213.6000 crore at September 30, 2026 from Rs 178.2309 crore at March 31, 2026.

Conclusion

Indigo Paints delivered double-digit revenue growth in both the September 2026 quarter and first half, but higher material costs and a less favourable product mix limited the earnings conversion. In Q2, consolidated revenue increased by Rs 46.6914 crore year on year while net profit declined by Rs 11.8559 crore, alongside the 6.6 percentage-point contraction in standalone gross margin.

The next quarterly result will indicate whether the high-cost inventory identified by management continues to affect gross margin after September 2026. The filing provides no margin-recovery target or formal outlook, leaving the movement in material costs, product mix, inventory and first-half operating cash flow of Rs 53.1319 crore as the disclosed issues to watch.