#1INDIGO Paints Ltd Investor Presentation (Q3 FY 22) 1 INDIGO Be surprised!#2Disclaimer Certain statements and opinions with respect to the anticipated future performance of Indigo Paints Ltd ("Indigo") in the presentation ("forward-looking statements"), which reflect various assumptions concerning the strategies, objectives and anticipated results may or may not prove to be correct. Such forward-looking statements involve a number of risks, uncertainties and assumptions which could cause actual results or events to differ materially from those expressed or implied by the forward- looking statements. These include, among other factors, changes in economic, political, regulatory, business or other market conditions. Such forward-looking statements only speak as at the date the presentation is provided to the recipient and Indigo is not under any obligation to update or revise such forward-looking statements to reflect new events or circumstances. No representation or warranty (whether express or implied) is given in respect of any information in this presentation or that this presentation is suitable for the recipient's purposes. The delivery of this presentation does not imply that the information herein is correct as at any time subsequent to the date hereof and Indigo has no obligation whatsoever to update any of the information or the conclusions contained herein or to correct any inaccuracies which may become apparent subsequent to the date hereof. Certain figures may have been rounded off to the nearest decimal. 2#3Agenda for discussion Quarterly Financials (Q3 FY22) 3#4Introduction There was a negative sentiment in some geographies due to the Omicron wave; however, the impact on sales was not very significant Large price hikes undertaken in mid/late Q3, in line with the industry to mitigate the sharp escalation in raw material prices Witnessed good sales growth in both Kerala and Rest of India. Sales impacted in few states due to delayed withdrawal of monsoon rains Company continued its advertising spends (including during the IPL in October) as part of its long term Brand building strategy. Launched new advertisement campaign "Jaisa performance waisi price" in January 2022, to position ourselves as a Premium Brand. Company making good progress in expansion of its manufacturing facility in Tamil Nadu; expect to complete it in Q2 of next fiscal. 4#5Indigo Paints | Q3 FY 22 financials Sr. No Statement of unaudited financial results for the quarter and nine months ended December 31, 2021 (All amounts in rupees lakhs, unless otherwise stated) Particulars 1 Income: Revenue from operations Other income Total Income Expenses: Dec 31, 2021 (Unaudited) Quarter ended Sep 30, 2021 (Unaudited) Dec 31, 2020 (Unaudited) 26,546.24 19,611.00 231.49 26,777.73 304.92 19,915.92 20,963.74 119.33 21,083.07 2 Material Related Expense 15,161.53 11,428.32 10,568.62 Employee benefits expense 1,455.71 1,384.53 1,260.75 Finance cost Depreciation and amortisation expense 28.73 787.00 Other expenses 6,061.39 Total Expenses 23,494.36 25.66 770.34 4,460.50 18,069.35 90.24 620.45 5,985.39 18,525.45 3 Profit before tax 3,283.37 1,846.57 4 Total tax expense 5 Net Profit for the period 6 Total Other comprehensive income for the period 7 Total Comprehensive Income for the period 852.88 2,430.49 (2.72) 2,427.77 491.76 1,354.81 2,557.62 679.14 1,878.48 (2.72) 1,352.09 (0.57) 1,877.92 5#6Indigo Paints | 9M FY 22 financials Sr. No Statement of unaudited financial results for the quarter and nine months ended December 31, 2021 (All amounts in rupees lakhs, unless otherwise stated) Particulars 1 Income: Revenue from operations Other income Total Income Nine months ended Dec 31, 2021 (Unaudited) Dec 31, 2020 (Unaudited) Year ended Mar 31, 2021 (Audited) 61,759.66 46,905.65 72,332.47 838.65 62,598.31 201.67 47,107.32 359.37 72,691.84 2 Expenses: Material Related Expense 35,089.88 Employee benefits expense 4,199.28 24,089.31 3,465.01 Finance cost 79.66 337.50 Depreciation and amortisation expense 2,292.70 1,741.96 37,651.70 4,831.28 381.31 2,438.95 Other expenses 14,248.85 11,393.43 17,597.88 Total Expenses 55,910.37 41,027.21 62,901.12 3 Profit before tax 6,687.94 6,080.12 9,790.72 4 Total tax expense 1,741.89 1,481.13 2,705.71 5 Net Profit for the period 4,946.05 4,598.99 7,085.01 6 Total Other comprehensive income for the period (8.16) (1.70) (10.87) 7 Total Comprehensive Income for the period 4,937.89 4,597.29 7,074.14 6#7Indigo Paints | Q3FY22 financial analysis Quarterly Financial Highlight I I I I Particulars (Rs. Crs) Other Income Quarterly Q3 I I I I T FY 21 I T I I Operational Income I 209.64 I I Q2 FY 22 196.11 Q3 I I FY 22 265.46 I I + I 1.19 3.05 2.31 T I I I Total 210.83 I 199.16 I 267.78 I Gross Profit Gross Margin % A&P EBITDA EBITDA % PBT PAT PAT% I I I T I 103.95 I I I 49.59% I I 81.82 41.72% I I I 113.85 I T 42.89% % Change RS. Cr Q3 FY 22 vs Q3 FY21 26.63% I I 30.40 I I 15.77 J 29.56 -2.76% I I T I T 31.49 I I I T 15.02% I I + I I I I J I 23.38 38.68 22.83% I 11.92% I I 14.57% I I 25.58 T I 18.47 32.83 28.34% I I I T I I T J I 18.78 I 13.55 I 24.30 29.39% I I I I 8.91% 6.80% 9.08% I I J#8Indigo Paints | 9MFY22 financial analysis 9 months Financial Highlight Particulars (Rs. Crs) Operational Income Other Income Total 9 Months Ended 9 M 9 M FY 21 FY 22 469.06 617.60 2.02 8.39 471.07 625.98 Gross Profit 228.16 266.70 Gross Margin % 48.64% 43.18% A&P EBITDA EBITDA % PBT PAT PAT% % Change RS. Cr 9M FY 22 vs 9M FY21 31.67% 46.16 61.03 32.21% 79.58 82.22 3.32% 16.97% 13.31% 60.80 66.88 10.00% 45.99 9.76% 49.46 7.90% 7.55% 00 8#9Analysis Q3 FY 22 Operational Income has expanded by 26.63% over Q3 FY 21 Good sales traction in Kerala and growth continues in strong double digits Gross Margins have dropped from 49.59% in Q3 FY 21 to 42.89% in Q3 FY 22. However, on a sequential basis, the gross margins have improved from 41.72% (Q2 FY 22) to a industry leading 42.89% due to large price increases in middle of Q3 Even during the tough inflationary environment, A & P spends in Q3 have been flat at Rs 29.56 cr compared to Rs. 30.40 cr in Q3 of FY 21, as the Company continues to invest in long term brand building EBITDA and PAT have expanded by 22.83% and 29.39% respectively over Q3 FY21, despite the reduction in Gross Margin %; only company in paint industry to report y-o-y growth in EBITDA and PAT EBITDA margin expanded to 14.57% sequentially from 11.92% in Q2 FY22 and PAT margin expanded to 9.08% from 6.80% in Q2 FY22 9#10Analysis 9M FY 22 Operational Income has expanded by 31.67% over 9M FY 21 Gross Margins have dropped from 48.64% in 9M FY 21 to 43.18% in 9M FY 22, due to sharp escalation in raw material prices. However, prices of raw materials are stable now, and with the sharp price increases effected in Q3, the Gross Margin % is expected to improve substantially in Q4 A & P spends in 9M FY 22 have been higher by Rs 14.87 cr compared to 9M of FY 21, as the markets opened and the Company continues to invest in Brand Equity. EBITDA and PAT have expanded by 3.32% and 7.55% respectively over 9M FY 21 despite lower Gross Margins and higher A&P spends; only paint company to report positive change here The EBITDA Margin at 13.31% was lower than 16.97% compared to 9M FY21, predominantly due to reduction in the Gross Margins. PAT Margin at 7.90% was lower than 9.76% (9M FY 21) due to lower Gross Margins and significant reversal of deferred tax credit availed in Q2 of FY 21 10#11Analysis The unprecedented escalation of raw material prices across all categories in recent months has been matched with unprecedented price hikes by the industry in Q3 FY 22 Prices of most of raw materials have stabilized, albeit at higher levels, and in fact are showing slightly downward trend during the last two months. With the price hikes undertaken, the profitability is expected to improve sharply in Q4 FY 22 Traditionally, Q4 has been the strongest quarter in terms of sales for our Company. Also, our higher Gross Margin contributing differentiated products have always had a disproportionately high share of revenue in Q4. Hence, we expect a very strong boost in top line, Gross Margins, EBITDA and PAT numbers in Q4 11#12Value / Volume Growth (Q3 FY 22 vs Q3 FY 21) Product Category Cement Paints + Putty Emulsions Enamels + Wood Coatings Primers + Distempers + Others 12 Value Growth Volume Growth 3.7% 0.1% 35.4% 15.9% 8.9% -4.5% 18.5% -3.6%#13Analysis (Value/Volume growth) Analysis of Volume growth and Value growth across broad categories of decorative paints are shown, as we feel that overall volume growth numbers do not reveal much Due to several rounds of price increases, the value growth in each category is higher than volume growth Witnessing higher volume growth in Emulsions segment (by far the largest contributor to overall value sales), and Premium Emulsion category in particular 13#14Network expansion . 31.3.21 30.6.21 30.9.21 31.12.21 No. of Depots 44 44 44 45 Active Dealers 13,214 13,884 14,716 15,242 Tinting m/c nos. 5,472 5,800 6,383 6,749 A depot at Hubli (Karnataka) was opened in October 2021 Expect to open a depot each at Himachal Pradesh & Delhi in Q4 Above expansion expected to further accelerate in current and future Quarters, as Covid restrictions ease Major thrust in Q4 for network expansion, and enlisting wholesalers of paints 14#15Future guidance . Have launched an innovative "Anti-Odour" paint in Q3, intended to absorb unpleasant odour in Kitchens and Bathrooms. Some innovative category-creator products being readied for launch in Q1 FY 23 Will attempt to take Active dealer count to 17,000 by year-end, and Tinting machine population to 7,200 Continue to increase advertising spends going forward in line with our long term strategy 15#16Thank You 16 INDIGO Be surprised!