Indigo Paints IPO: Attractive pricing fetches over 117 times bids

The initial public offering (IPO) of Indigo Paints on Friday garnered 117x subscription, generating bids worth Rs 96,222 crore. 

The qualified institutional buyer (QIB) portion of the issue was subscribed 190x, while the high networth individual  or HNI segment was subscribed 263x. 

The retail and employee portions were subscribed 16x and 2.5x, respectively.

Analysts said the attractive pricing, relative to its peers, along with its higher growth potential attracted investors towards the issue.

“We forecast FY20-23e EPS CAGR of 48 per cent for Indigo Paints, compared to 14-15 per cent for Asian Paints and Berger, whereas the company valuation at 46x its FY23 EPS implies a 28-41 per cent discount to both these peers. We recommend investors to subscribe to the IPO,” IIFL had said in an IPO note.

Pune-based Indigo Paints is the country’s fifth-largest decorative paints company.

The company generates nearly half its sales from southern India, and is ranked third in terms of market share in Kerala.

The price band for the IPO was set at Rs 1,488-1,490 per share. At the top end, the company will have a market capitalisation of Rs 7,088 crore. 

The listing comprises a fresh equity issuance of Rs 300 crore, and a secondary share sale worth Rs 870 crore. The firm plans to use bulk of the issue proceeds to meet its expansion goals.

Indigo Paints is the second company to launch its IPO this year. 

Earlier this week, the offering of state-owned Indian Railway Finance Corporation  or IRFC was subscribed 3.5x. 

Two more listings will remain open for subscription next week.