Indigo's 4QFY21 & FY2021 was in-line with our estimates (it's early days to have (published) consensus expectations). That said, some investors may interpret the 4Q revenue growth print of 41% (versus APNT at 44%) as a tad underwhelming. In our view, the long-term (growth) story of Indigo is intact, as of now - (1) it has increased dealer count by ~2,000 to 13,200 in FY21 (tinting machines to 5,500 (from 4,300 in FY20)), (2) revenue share of differentiated products has increased to ~30% in FY21 from ~29% in FY20, (3) revenue share of non-Kerala states increased to yoy ~70% in FY21 from ~65% (though it raises some questions on growth in Kerala).

Q4FY21 results: Indigo reported revenue growth of 40.8% YoY, however, EBITDA and PAT declined 7.9% and 8.9%, respectively due to higher raw material prices. It had raised prices of some SKUs during Dec'20-Feb'21. It has again raised prices of some SKUs in May'21. Gross and EBITDA margins declined 570bps and 890bps, respectively, YoY.

Segment-wise volume growth rates in FY21: Cement Paints & Putty 19.6%, Emulsions 8.7%, Enamels & Wood coating 15.4% and Primers, Distempers & Others 20.3%. Note that Emulsions have higher revenue saliency in Apr-Jun quarter. Lockdown in Q1FY21 impacted volume growth of Emulsions. Key state Kerala reported low single digit revenue growth and its contribution declined to ~30% in FY21 from ~35% in FY20.

Strengthening of competitive advantages: Indigo has increased dealer count by 18% to 13,200 while its tinting machine count increased to 5,500 in FY21 from 4,300 in FY20. Though the advertisement and sales promotion spends declined 2.5% in FY21, media spends increased 3% YoY. The revenue share of differentiated products increased to 29.5% in FY21 from 28.6% in FY20.