Home >Markets >Ipo >Indigo Paints IPO subscribed over 50 times so far on final day

The IPO of Sequoia Capital-backed Indigo Paints, which opened on Wednesday, was subscribed over 50 times as of 3 pm on final day. The issue will conclude on January 22. Ahead of the initial public offering, Indigo Paints mopped up 348 crore from anchor investors at 1,490 apiece. The anchor investors include Government of Singapore Investment Corporation, Fidelity, Goldman Sachs, Nomura and HDFC MF. Pune-based Indigo Paints manufactures a range of decorative paints and has an extensive distribution network across the country.

Here are 10 things to know about IndiGo Paints IPO:

1) The price band of Indigo Paints IPO has been fixed at 1,488-1,490 a share for the initial share-sale while the lot size is 10.

2) The share allocation in Indigo Paints IPO is likely to be finalised on 28 January while listing may happen on 2nd February, brokerages say.

3) At the upper end of the price band, the initial public offer (IPO) is expected to fetch 1,170 crore, which comprises 300 crore through fresh issuance of shares and 870 crore through OFS.

4) The offer for sale relates to sale up to 58,40,000 equity shares by private equity firm Sequoia Capital, through its two funds SCI Investments IV and SCI Investments V, and promoter Hemant Jalan.

5) Post issue, the shareholding of promoters will fall to 54% from 60%.

6) Proceeds from the fresh issuance of shares would be used for expansion of the Indigo Paint's existing manufacturing facility at Pudukkottai in Tamil Nadu and repayment/prepayment of borrowings. The company has three manufacturing facilities located in Rajasthan, Kerala and Tamil Nadu.

7) Kotak Mahindra Capital Company, Edelweiss Financial Services and ICICI Securities are the book running lead managers to the issue.

8) According to domestic brokerage Motilal Oswal Indigo Paints Ltd is the 5th largest decorative paints company in India with strong portfolio of differentiated products. "Indigo Paints has grown at a 42% CAGR over FY10-19 vs. 12-13% CAGR recorded by top four players. Even in FY20 (impacted due to Covid-19), Indigo grew at 17% YoY vs -9% to 5% for other players. Multi-pronged strategy helped it garner higher sales and thus achieve 5th position in a highly competitive industry despite being a late entrant. It has attained 2% market share pan India and enjoys 3rd position in Kerala," said the brokerage, which has a subscribe rating.

9) "We like Indigo Paints given its differentiated product portfolio and robust expansion plans. We believe it can attain scale and maintain its strong growth over next few years. The issue is valued at 11.3x FY20 Mcap/sales which is comparable to peers. Hence we recommend subscribe to the IPO from long term perspective. Further given the current buoyant market and high interest for consumer stocks, the issue could see listing gains as well," Motilal Oswal said.

10) In FY20, Indigo Paints had reported revenues of 625 crore with net profit of 48 crore. "At the upper price band of Rs.1,490, IPL is available at P/E of 130x (annualized basis on FY21E EPS of Rs.11.4) and seems to be at a premium compared to the listed peers," Geojit said in a note.

"In spite of premium valuations, being the fastest growing paint company in India driven by developing niche product to compete market leaders, expansion plans, low debt and strong return profile with RoE of 25% in FY20 will make it an emerging player in the industry, we assign a “Subscribe" rating," it said.

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