Indigo Paints IPO to launch on 20 Jan with ₹1,488– ₹1,490 price band1 min read . Updated: 14 Jan 2021, 11:05 PM IST
The IPO comprises a fresh issuance of equity shares aggregating to ₹300 crore by the company and an offer for sale of up to 5,840,000 shares by Sequoia Capital India Investments IV and SCI Investments V and promoter Hemant Jalan.
Indigo Paints Ltd will launch its initial public offering (IPO) on 20 January to raise around ₹1,170 crore. The price band has been set at ₹1,488– ₹1,490 a share for the three-day public offering that will end on 22 January.
The IPO comprises new equity shares aggregating to ₹300 crore by the company and an offer for sale of up to 5.84 million shares, or 12.81%, by Sequoia Capital India (SCI) Investments IV, SCI Investments V, and the promoter selling shareholder, Hemant Jalan.
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Indigo Paints proposes to utilize the net proceeds of the share sale by allocating ₹150 crore towards funding capital expenditure for expansion of its existing manufacturing facility at Pudukkottai, Tamil Nadu, by setting up an additional unit adjacent to the existing facility. Another ₹50 crore will be utilized for purchase of tinting machines and gyroshakers, ₹25 crore towards repayment/prepayment of all or certain company’s borrowings, and the remaining towards general corporate purposes.
Kotak Mahindra Capital Co. Ltd, Edelweiss Financial Services Ltd, and ICICI Securities Ltd are advising the company on the IPO.
Indigo Paints is the fifth-largest company in the decorative paint industry in India in terms of its revenue from operations for FY20. As on 30 September, the firm owned, operated three manufacturing facilities in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). These facilities had a total installed production capacity of 101,903 kilolitres per annum for liquid paints and 93,118 tonnes per annum for putties and powder paints. The company has an extensive distribution network across 27 states and seven Union territories as of September.
“Indigo paints have doubled its net profit margins from 3.2% in FY2018 to 7.7% in FY20 while peers like Asian Paints and Berger Paints were able to increase margins by 2.5% and 3.4% respectively. Indigo Paint is well placed to outperform the industry in future, we have a positive outlook for the IPO," said Yash Gupta, analyst at Angel Broking Ltd.