Updated: January 20, 2021 7:05:08 pm
The initial public offering (IPO) of Sequoia Capital-backed Indigo Paints opened for subscription earlier today and was oversubscribed within a few hours itself. So far, the issue was subscribed over 1.89 times by the end of first day of bidding. It received a demand for 1,04,67,410 shares across both the stock exchanges against 55,18,402 shares on offer.
Indigo Paints manufactures a range of decorative paints and has an extensive distribution network across the country.
The Indigo Paints IPO will be available for subscription till Friday, January 22, 2021, and the price band of the Pune-based paint manufacturer has been fixed at Rs 1,488-1,490 per share. At the upper end of the price band, the public issue is expected to fetch Rs 1,170.16 crore.
Investors who wish to subscribe to Indigo Paints IPO can bid in a lot of 10 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,900 to get a single lot of Indigo Paints. The shares will be listed on both BSE as well as the National Stock Exchange (NSE).
All applicants of Indigo Paints IPO also must note that the cut-off time for UPI mandate confirmation is Monday, January 25, 2020, upto 12:00 pm. If they fail to do so then their application may not be considered.
The Indigo Paints IPO comprises fresh issuance of stocks aggregating to Rs 300 crore and an offer-for-sale of up to 58,40,000 equity shares (including anchor portion of 23,35,020 equity shares) by Sequoia Capital through its two funds — SCI Investments IV and SCI Investments V — and promoter Hemant Jalan.
The anchor investors’ portion was open for subscription on Tuesday and Indigo Paints collected Rs 348 crore from anchor investors, news agency PTI reported earlier today.
Kotak Mahindra Capital Company, Edelweiss Financial Services and ICICI Securities are the lead managers to the Indigo Paints IPO while Link Intime India is the registrar to the issue.
The proceeds from the IPO would be used to expand the company’s existing manufacturing facility at Pudukkottai in Tamil Nadu, purchasing tinting machines and gyro shakers and repayment/prepayment of borrowings.
Geojit Financial Services, IIFL Securities and LKP Securities in their respective research notes have all recommended “Subscribe” to the offer.
IIFL Securities in its IPO note said, “As per our estimates, Indigo Paints would yield a valuation of 46x FY23E EPS (on upper price band) vs. 63x for Asian Paints and 77x for Berger Paints. A combination of higher growth and lower valuations makes for an exciting investment opportunity. We recommend Subscribe to the IPO, given favorable growth valuation equation.”
LKP Securities in its research report noted that, “Indigo is the fastest growing paint company which has grown at a much faster pace in the last decade than any other paint company in india. The company has adopted a differentiated approach to market and sell its products in the industry which is dominated by the larger players. Indigo has been able to expand its EBIDTA/PAT margins from 6.4%/3.2% in FY18 to 14.6%/7.7% on the back of economies of scale and better raw material sourcing. The company’s ROE & ROCE has also improved significantly to be at par with the industry leaders in the last five years.”
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