Indigo Paints ₹1,000 crore IPO opens on January 20 — price band set at ₹1488-1490 per share

Indigo Paints ₹1,000 crore IPO opens on January 20 — price band set at ₹1488-1490 per share
Indigo Paints
  • Sequoia Capital-backed Indigo Paints ₹1,000 crore IPO will open on January 20 and remain open for subscription until January 22.
  • The price band for the IPO has been set at ₹1488-1490 per share.
  • The Pune-based company is the fifth-largest company in the decorative paints segment in terms of revenue for fiscal year 2020. It has an extensive distribution network across the country.
  • Keshav Lahoti, Associate Equity Analyst at Angel Broking, said, “If the issue is priced reasonably, we expect a good response for this IPO.”
Sequoia Capital-backed Indigo Paints is set to launch its ₹1,000 crore IPO next week. The issue will open on January 20 and remain open for subscription until January 22. The price band has been set at ₹1488 - ₹1490 per share.

The bids can be made for a minimum of 10 equity shares and in multiples of 10, thereafter.

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The company received capital markets regulator Sebi’s approval for an initial public offering last week. This will make it the second offering to hit the public market in 2021, after IRFC.

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The public issue consists of fresh issue of equity shares as well as an offer for sale, through which the existing shareholders will be selling part of their stake.
Indigo Paints IPO: Offer Size
Fresh issue of sharesupto ₹3,000 million
Sequoia Capital India IV2 million shares
SCI Investments 2.1 million shares
Hemant Jalan1.67 million shares
Source: Red herring prospectus (RHP)

The company has appointed Kotak Mahindra Capital Company, Edelweiss Financial Services and ICICI Securities as the book running lead managers to the issue.

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The proceeds of the issue will be used for expansion of the existing manufacturing facility at Pudukkottai in Tamil Nadu, purchase of tinting machines and gyro shakers, and repayment/prepayment of borrowings.

The Pune-based firm is the fifth-largest company in the Indian decorative paints segment in terms of revenue for fiscal year 2020. It has three manufacturing facilities located in Rajasthan, Kerala and Tamil Nadu.

HDFC Securities in an earlier IPO note said that making inroads into the paints industry with a small number of firms remains a herculean task, given strong distribution moats of the top few. “Against this backdrop, Indigo Paints (founded in 2000) has been consistently chipping away market share within the ecosystem.”

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Indigo Paints’ revenue and profitability has consistently improved over the last few years. HDFC Securities also noted that the company has ‘smartly executed its revenue ramp-up’ and that reflects in the company’s improving fundamentals.

Indigo Paints ₹1,000 crore IPO opens on January 20 — price band set at ₹1488-1490 per share
BI India

Keshav Lahoti, Associate Equity Analyst at Angel Broking in a written statement to Business Insider also said that “If the issue is priced reasonably, we expect a good response for this IPO.”

Even the shares are piping hot in the grey market ahead of the price band announcement. The shares were trading at a premium of ₹800-820 in the grey market.
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The grey market premium is the measure of the extra amount that the market is ready to pay for a newly listed company’s shares. However, it is not an official measure of the market premium. But it is a fair indicator of demand for the shares in the market.

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