Indigo Paints share lists at 75% premium to issue price

Indigo Paints Makes Stellar Stock Market Debut Lists At Premium Of 75

Edelweiss Financial Services, ICICI Securities and Kotak Mahindra Capital Company were the lead managers of Indigo Paints IPO.

The shares of Indigo Paints made a strong market debut on Tuesday, with a 75 per cent premium over its issue price of Rs 1,490, given the strong initial public offering (IPO) subscription and Budget-driven bullish market sentiment. It touched an intra-day high of Rs 3,129 (which was the 20 percent upper circuit) and low of Rs 2,428.20. Analysts had recommended only investors with a high-risk appetite to subscribe for the Indigo Paints IPO. Later, it zoomed 110 per cent to Rs 3,129 during the day.

The Market Capitalization of the Company post today's closing price stands at Rs. 14,835 crores as per BSE data.

The price range for the offer was fixed at Rs 1,488-1,490 per share. "There are a few challenges in terms of setting up a wide distribution presence amidst well-established players, its skewed market presence in South India, especially Kerala and rich valuations at a PE of 140x compared to a sector average of 95x".

The IPO comprised new equity shares aggregating to ₹300 crore by the company and an offer for sale of up to 5.84 million shares, or 12.81%, by Sequoia Capital India (SCI) Investments IV, SCI Investments V, and the promoter selling shareholder, Hemant Jalan.

Indigo Paints said that it will use the IPO proceeds to expand its manufacturing facility at Pudukkottai in Tamil Nadu, buy tinting machines and gyro shakers, and repay / prepay borrowings.

The firm backed by American venture capital firm Sequoia Capital, garnered Rs 347.9 crore from 25 anchor investors ahead of the share sale. The company has three manufacturing facilities in Kochi, Jodhpur and Pudukkottai.

Pune-based Indigo Paints clocked a 78% jump in profit for the year ended March 31, 2020, on revenue growth of 16.6%, according to its prospectus.

The company has been gaining market share.



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