Indigo Paints IPO Review 2021: The new year has already brought several great news. Two of them being the IPO’s set for next week. This includes the IPO for Indigo Paints. Indigo Paints IPO opens next week between Jan 20-Jan 22, 2021.
In this article, we look into important information on the Indigo Paints IPO 2021 and find out the possible prospects of the company.
Indigo Paints IPO – About the Company
Indigo Paints was incorporated in the year 2000 by IITian Hemant Jalan in Jodhpur. He started the company as he felt that there was a big market for Cement Paints. Jalan faced many hurdles in scaling his business this was because the industry already had strong competitors that already had a place on retail shelves. Advertising too was made impossible when competing with these giants.
This was when Jalan decided to take a different approach towards the market. He introduced differentiated products in the industry. Indigo paints introduced Metallic paints in India which gave a unique look. This product was welcomed by retailers even with the lack of advertisement.
Since then the company has introduced many more products to the market like Floor coat paint which can withstand vehicular traffic, ceiling coat paint, tile coat paint, Dirtproof & Waterproof Exterior Laminate, Floor Coat Emulsions, Exterior, and Interior Acrylic Laminate, and PU Super Gloss Enamel.
Due to its differentiated product line, Indigo paints today is one of the fastest-growing paint companies in India. It is the 5th largest company in the decorative paint industry. The sales of their differentiated products have been continuously growing from 26.68% in 2018 increased to 28.62% in fiscal 2020.
Indigo Paints also has a strong distribution network across 27 states and seven union territories. The company also has strategically set manufacturing facilities in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). Over the years Indigo Paints has been successful in capturing 2% of the paint industry.
Effects of the Pandemic on Indigo Paints
Indigo Paints did not suffer any adverse impacts due to the pandemic. This was because of its negligible exposure the company has to big cities. They only account for 1-2% of their sales. The company predominantly operates in Tier 2-4 cities.
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Indigo Paints IPO Information
Indigo paints received the nod from SEBI earlier this month and will be open for subscription from January 20 and close on January 22. Kotak Mahindra Capital Company, Edelweiss Financial Services, and ICICI Securities will be the book running lead managers to the public issue. The IPO will include a fresh issue of shares and the sale of existing shareholder stakes. These include Sequoia Capital, SCI Investments, and promoter Hemant Jalan.
Important Indigo Paints IPO details
| Particular | Details |
|---|---|
| IPO Size | Rs. 1176 Crores |
| Fresh Issue | Rs. 300 Crores |
| Offer For Sale(OFS) | Upto 58,40,000 shares |
| Opening Date | Jan 20, 2021 |
| Closing Date | Jan 22, 2021 |
| Face Value | Rs. 10 per Equity Share |
| Price Band | Rs. 1480 to Rs. 1500 per Equity Share |
| Minimum Lot Size | 10 shares (Rs.15,000) |
| Maximum Lot Size | 130 shares (Rs. 195000) |
| Listing Date: | Feb 02, 2021 |
Indigo Paints IPO – Purpose of the IPO
The proceeds from the IPO will be used for the following purposes
- The company intends to open one more manufacturing facility in Tamil Nadu. Here it will be adding capacities to manufacture water-based paints to cater to the growing demand for these paints. The manufacturing unit in Tamil Nadu will have a capacity of 50,000 KLPA and is expected to be operational during FY2023.
- The proceeds will also be used to purchase tinting machines and gyroshakers.
- To repay borrowings
- For other corporate purposes.
Indigo Paints IPO – Competitors in the Industry
(Market Share – Paint Industry)
A few of the biggest competitors of Indigo Paints in the Paint Industry are Asian Paints, Berger Paints, Kansai Nerolac Paints, Akzo Nobel India Ltd aka Delux Paints, British Paints India Ltd, Nippon Paint India, Shalimar Paints Ltd.
| Company | Market Cap | PE Ratio TTM |
|---|---|---|
| Akzo Nobel India Ltd. | 10757.76 | 60.7646 |
| Asian Paints Ltd. | 259415.04 | 114.991 |
| Berger Paints India Ltd. | 77344.22 | 128.3189 |
| Kansai Nerolac Paints Ltd. | 33898.05 | 85.7375 |
| Shalimar Paints Ltd. | 576.67 | -- |
(Paint Industry Stocks India – Source: Trade Brains Portal)
Closing Thoughts
Indigo Paints has come a long way especially considering the number of large players and moats present. But do you think the company will be to replicate the success of large brands like Asian Paints now that it is competing in the big leagues? Let us know what you think about Indigo Paints IPO by commenting below. Happy Investing.
Aron, Bachelors in Commerce from Mangalore University, entered the world of Equity research to explore his interests in financial markets. Outside of work, you can catch him binging on a show, supporting RCB, and dreaming of visiting Kasol soon. He also believes that eating kid’s ice-cream is the best way to teach them taxes.
