You are here: Home » Markets » News
Business Standard

Indigo Paints makes solid debut, lists at 75% premium over issue price

The IPO of Indigo Paints had garnered 117 times subscription, generating bids worth Rs 96,222 crore

Topics
Indigo Paints | Buzzing stocks | Markets

SI Reporter  |  Mumbai 

Indigo Paints makes solid debut; lists at 75% premium over issue price
Pune-based Indigo Paints is the country’s fifth-largest decorative paints company

Shares of made a solid debut on the bourses on Tuesday, listing at Rs 2,607.50, a 75 per cent premium against issue price of Rs 1,490 on the National Stock Exchange (NSE) and BSE. The stock surged to Rs 3,129, up 110 per cent against issue price on the BSE and NSE, exchange data shows.

At close, was at Rs 3,118.6, up 109 per cent against issue price on the BSE.

The attractive pricing, relative to its peers, along with its higher growth potential had attracted investors towards the issue. The initial public offering (IPO) of had garnered 117 times subscription, generating bids worth Rs 96,222 crore. The qualified institutional buyer (QIB) portion of the issue was subscribed 190 times, while the high networth individual or HNI segment was subscribed 263 times. The retail and employee portions were subscribed 16 times and 2.5 times, respectively.

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 firm plans to use bulk of the issue proceeds to meet its expansion goals.

Indigo Paints’ product innovation (largely differentiated products), increase in dealers reach (especially in the large cities) and support for products with adequate brand investments will be the key growth levers in the coming years. Though Indigo’s valuations are at premium to peers, strong financial track record, promoters experience and confidence to lead the business coupled with industry par return profile makes it an emerging play in the domestic decorative paint industry, brokerage firm Sharekhan said in IPO note.

According to Angel Broking, Indigo Paints has a track record of consistent growth in a fast growing industry with entry barriers. The company has differentiated products leading to greater brand recognition and enabling expansion into a complete range of decorative paint. It also has leveraged brand equity and distribution network to populate tinting machines. Strategically located manufacturing facilities with proximity to raw materials helps to report better gross margins, the brokerage firm said in a note.

Indigo Paints built upon its position in the high entry barrier industry by developing differentiated products portfolio (29 per cent of sales). Given the early mover advantage in this space, these products yield relatively higher margin for Indigo which is now at par with peers. It also made it easier for the company to build upon its brand, expand its distribution network pan India (11000 dealers) and install ~4,600 tinting machines at dealers which helped push up sales, analyst at Motialal Oswal Securities said in IPO note.

We like Indigo Paints given its differentiated product portfolio and robust expansion plans. We believe it can attain scale and maintain its strong growth over next few years, the brokerage firm said.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, February 02 2021. 10:04 IST
RECOMMENDED FOR YOU
.