The second IPO of January, Indigo Paints IPO offer opens on January 20, 2021. Before the issue opens, let’s dive deep into the company’s fundamentals and look at its financials to have clarity on its potential.
About Indigo Paints and IPO Offer
Indigo Paints started in 2000 with manufacturing low-end cement paints. Since, the Pune-based company diversified into the categories of emulsions, distempers, and primers. Simultaneously, it established a strong distribution network, which helped it expand rapidly. The company demonstrated a strong growth to become the fifth-largest company in the segment. It has three strategically located plants in the states of Rajasthan, Tamil Nadu, and Kerala. It mentioned in the DRHP that it plans to utilise the funds to expand production capacity of its Tamil Nadu plant.
Over the last five years, the company has shown strong growth, doubling its profit after tax (PAT) from 3.2 percent FY 2018 to 7.7 percent FY 2020. Between 2018 and 2020, the company’s PTA grew at a CAGR of 14.2 percent. It has also registered a growth rate of CAGR 21.20 percent in the last four years.
Indigo Paints IPO Details
Here are essential details regarding offer size, price band, and date to make an informed decision.
- Indigo Paints is looking to raise Rs 1,176.00 crores from the market
- Important Indigo Paints IPO dates: offer subscription date January 20-22, 2021, and tentative listing date is February 2, 2021
- The offer size contains both fresh shares and offer for sale equities worth Rs 300 crores and Rs 870.16 crores respectively
- Indigo Paints IPO price band is decided at Rs 1,488-1,490; currently, the shares are trading 57 per cent premium in the grey market
- Investors must apply for a minimum of ten shares and increase their bid size up to 13 lots or 130 shares
- The issuer has reserved 70,000 shares for eligible employees, and they will receive a discount of Rs 148
How To Apply For Indigo Paints IPO
The process to apply for IPOs has now become online. Retail investors applying for the offer need to make payment through UPI (you’d have to link your account to a UPI handle). Following Application Supported by Blocked Amount (ASBA), the bank will block the amount in the applicant’s account to the extent of the application size.
Login to your Angel One user portal, select Indigo Paints IPO from the available initial public offering list. Click on ‘bid’ and fill in all required details. You will receive a payment mandate in your UPI handle, approve it to complete the bidding process.
The company is a strong contender in its segment, where Asian Paints, Berger Paints, Kansai Nerolac, and Akzo Nobel are its competitors. The four major companies share 65-70 percent of the market between them. Indigo Paints comes fifth with over a 2 percent market share. In the market, its peers Asian Paints and Berger Paints are already listed in the exchanges, currently trading at a PE of 111 and 148, respectively.
Indigo Paints in the last four years has exhibited strong financials and growth. Recently, it has undertaken focused brand-building activities to create consumer awareness. As an industry, the Indian paint segment has a lot of headroom to grow. In 2019, it was the second-largest market globally but with a meagre per capita consumption of 4.1 kg, which means there are many growth opportunities for companies like Indigo Paints and its peers.