Sequoia Capital-Backed Indigo Paints’ IPO, which opened today, was subscribed 1.26 times from 2:15 p.m. Before going public, Indigo painted paints £348 crore from anchor investors £1,490 each. Anchor investors include the Government of Singapore Investment Corporation, Fidelity, Goldman Sachs, Nomura and HDFC MF. Pune-based Indigo Paints makes a range of decorative paints and has an extensive distribution network across the country.
Meanwhile, IRFC’s IPO ends today, while the Home First Finance public edition opens later this week.
Here are 10 Things You Should Know About IndiGo Paints IPO:
1) Indigo Paints IPO price range has been set at £1,488-1,490 per share for the first sale of shares with a lot size of 10. The issue ends on January 22nd.
2) The Indigo Paints IPO share allocation is expected to close on January 28th, while the listing may occur on February 2nd, brokers said.
3) At the upper end of the price range, the initial public offering (IPO) is expected to be achieved £1,170 crore, which includes £300 crore by reissuing shares and £870 crore by OFS.
4) The sales offer relates to the sale of up to 58,40,000 shares by the private equity company Sequoia Capital through its two funds SCI Investments IV and SCI Investments V as well as the promoter Hemant Jalan.
5) After the issue, the share of project sponsors will decrease from 60% to 54%.
6) Proceeds from the re-issue of shares would be used to expand Indigo Paint’s existing manufacturing facility in Pudukkottai, Tamil Nadu and to repay / prepay loans. The company has three manufacturing facilities in Rajasthan, Kerala and Tamil Nadu.
7) Kotak Mahindra Capital Company, Edelweiss Financial Services, and ICICI Securities are primary responsible for the issue.
8) According to the domestic broker, Motilal Oswal Indigo Paints Ltd is the 5th largest decorative paint company in India with a strong portfolio of differentiated products. “Indigo Paints is up 42% from FY10-19 month-over-month, up 12-13% compared to 12-13% CAGR posted by the top four players. Even in FY20 (affected by Covid-19) Indigo grew 17% year-over-year versus -9% to 5% for other players. The multi-layered strategy has helped generate higher sales, ranking 5th in a highly competitive industry despite being delayed. It has a market share of 2% across India and ranks 3rd in Kerala, “said the brokerage, which has a subscription rating.
9) “We like Indigo Paints for its differentiated product portfolio and robust expansion plans. We believe it can achieve scalability over the next few years and maintain its strong growth. The issue is valued at 11.3x FY20 Mcap / sales, which is comparable Company is comparable. We therefore recommend taking the IPO long-term. Given the current buoyant market and high interest in consumer stocks, the issue could also lead to price gains, “said Motilal Oswal.
10) In fiscal 20, Indigo Paints had sales of £625 crore with net profit of £48 crore. “At the upper price range of Rs. 1,490, IPL is available at a P / E of 130x (annualized based on EPS for FY21E of Rs. 11.4) and appears to have a premium compared to the listed peers,” said Geojit in a note.
“Despite the premium ratings, the company is becoming one as the fastest growing paint company in India, driven by niche product development versus market leaders, expansion plans, low debt and a strong return profile with a RoE of 25% in FY20 emerging companies in the industry. ” , we give a “subscribe” rating, “it said.
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