So the results are out and Indigo Paints has scored on all parameters i.e. EBIDTA, Profit, Revenue and Margins. Note that it had higher advertising spends this time and still managed to grow top and bottom lines. It continues to strengthen its position in the Premium Emulsions category (biggest revenue contributor) and has posted very good volume growth. Now my question and confusion is, why is the market not excited with these results? The stock had taken a beating for 12 months now and I was hoping this set of numbers would warrant a cheer from the market but NO ! I have read in some articles that the market did not like the fact that this PAT and margin growth came at the expense of price hikes. But isn’t it a good thing that they were able to pass on the costs? I have been studying and investing in the stock market since 18 months now so my knowledge is quite limited but from all the books, articles, experiences of other investors that I have read about, I did gather that any player who is able to sustain or improve margins during a downturn, is worth his salt. It demonstrates superior product or pricing power or good demand etc. So why is this a bad thing? Also, with the RM costs softening, advertising spends expected to come down, the margins will only improve. So what am I missing here? Thanks
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