Shares of this top paint stock dropped about 6 percent after a block deal on Friday transferred 25 percent of the equity, worth Rs.1,750 crore.
Share Price Movement
On Friday, Indigo Paints Limited’s share price fell 5.67 percent to an intraday low of Rs.1,452.1 per share from its previous close of Rs.1,539.4 apiece. The price has since recovered and is now trading at Rs.1,485.9 per share.
Reason for the fall
Indigo Paints stock experienced a block deal where up to 25 percent of the equity stake was sold for approximately Rs.1,750 crore, with Peak XV Partners offloading a portion of their shareholding on September 6.
A total of 1.17 crore shares of Indigo Paints were sold likely, with Peak XV offering up to 52 lakh shares, representing about an 11 percent stake in the company, according to Bloomberg.
According to reports, Peak XV Partners held a 25.23 percent stake in Indigo Paints at the end of the June quarter. Of this, Peak XV Partners Investments IV held 12.14 percent, while Peak XV Partners Investments V held 13.09 percent in the company.
The shares were sold at Rs.1,493 per share, as reported by CNBC TV18. The offer price for the block deals was set at Rs.1,470 per share, reflecting a 4.6 percent discount to Indigo Paints’ closing price of Rs.1,534 on September 5.
Overview
Indigo Paints, which was founded in the year 2000, and had its IPO in 2021, has seen its stock fall 42 percent since its debut and rise less than 3 percent this year, lagging behind the Nifty’s 15 percent gain.
The recent share sale by Peak XV Partners, which is also reducing stakes in Go Fashion, Five Star Business Finance, and Aptus Value Housing, marks a significant monetization move. Peak XV Partners is the India and Southeast Asia arm of Sequoia Capital, rebranded from Sequoia India in 2023.
Analysts are optimistic about its growth due to strong brand acceptance and an expanded distribution network, though competitive risks remain.
Financial Performance
In its latest financial update, Indigo Paints reported net sales of Rs.311 crore for Q1 FY25, an 8 percent increase from Rs.288 crore in the same quarter last year. However, the company’s net profit for the quarter was Rs.27 crore, down from Rs.32 crore in Q1 FY24, reflecting a 15.625 percent decrease.
Company Overview
Indigo Paints, a leading paint company in India, offers a diverse range of decorative and industrial paints. It was the first to introduce innovative products like Metallic Emulsions and Tile Coat Emulsions to the Indian decorative paint market.
Written by – Siddesh S Raskar
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