India’s oldest and country’s 5^th largest organized player, Shalimar Paints, posted 24% YoY drop in topline to Rs. 86 crore, during three months ended 30^th June 2015. Thanks to lower input costs as price of crude and derivatives softened in the quarter gone by, company’s material cost as a percentage to sales reduced from 73.2% in Q1FY15 and 70.9% in FY15 to 65.5% in Q1FY16, leading to one of the highest EBITDA margin in past 5 quarters, of 4.3%. However, high debt soared finance costs to Rs. 5.34 crore from Rs. 4.89 crore YoY, continuing the bottomline to be in the red, with net loss standing at Rs. 2.1 crore, shrinking from Rs. 3.1 net loss YoY. Thus, EPS for Q1FY16 is negative 1.11, vis-à-vis  negative 5.59 for FY15.

Going by the cues from Shalimar’s results, other paint manufacturers are also likely to benefit from fall in input prices, and are likely to report robust net profits, as all listed players except Berger Paints are debt-free. At current price of Rs. 135, Shalimar Paints’ market cap stands at Rs. 256 crore with enterprise value of Rs. 384 crore, on annual topline of Rs. 400 crore, having annual manufacturing capacity of 60 million litres of paint, spread across 3 facilities in India.