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Indigo Paints IPO: Know the Details

Created on 16 Jan 2021

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Just halfway into January, and the IPO wave of the new year is already starting to rise. Indigo Paints, which is one of the leading paints companies in the Indian paints industry, is about to make an entry into the market with its IPO in January 2021. 

The price band has been fixed at ₹1,488 – ₹1,490 per equity share of the face value of Rs 10 each. The IPO comprises a fresh issue of ₹300 crores and an offer for sale by existing investors amounting to ₹870 crores is at the upper band.

Link Intime India Private Ltd is the registrar for the Indigo Paints IPO. 

Let’s get to know the company better and get a more detailed view on its upcoming IPO.

About Indigo Paints

Indigo Paints is one of the fastest-growing among the top five paint companies in India. In terms of revenue for FY2020, they are the fifth-largest company in the Indian decorative paint business.

They produce a whole variety of decorative paints comprising emulsions, enamels, wood coatings, distempers, primers, putties and cement paints.

Indigo Paints also identify potential product needs from customers and introduce differentiated products to meet these requirements, and create a distinct market for its products. 

For instance, they are the original company in the decorative paint market in India to produce and present specific differentiated products, which comprises Metallic Emulsions, Tile Coat Emulsions, Bright Ceiling Coat Emulsions, Floor Coat Emulsions, Dirtproof & Waterproof Exterior Laminate, Exterior and Interior Acrylic Laminate, and PU Super Gloss Enamel. The trades from these differentiated products are constantly increasing as it was 26.68% in 2018 and rose to 28.62% in fiscal 2020.

Indigo Paints has a robust market network with dealers in Tier 1, Tier 2, and Metros as well. It has 3 manufacturing plants located in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). Moreover, it is seeming to enlarge its manufacturing capabilities at Pudukkottai to produce water-based paints.

Competitive Strength of the company

  • Good track record of steady growth in a rapidly increasing industry with major entry hurdles.
  • Differentiated products leading to superior brand perception and permitting expansion into a whole range of decorative paint products.
  • Attentive brand-building programmes to steadily build brand equity.
  • The widespread distribution network for improved brand access.
  • Strategically located manufacturing facilities.
  • Experienced and professional management squad with a dedicated employee base.

Financial Performance of the company

Fin. Year
ending

Total Revenues (Rs in Millions)

Profits after tax
(Rs in Millions)

Profit %

Mar-2018

4,031.0

128.6

3.2%

Mar-2019

5,372.0

268.7

5.0%

Mar-2020

6,264.0

478.1

7.6%

Future strategies of Indigo Paints Ltd

1) Maintain an emphasis on developing differentiated products to increase market share.

2) Further fortify its brand to strengthen its stance as a leading paint company in India.

3) Increased penetration in prevailing markets and enlarge existence in exclusive new territories by populating tinting machines.

4) Enlarge its manufacturing capabilities.

Indigo Paints IPO Details

IPO Opening Date

Jan 20, 2021

IPO Closing Date

Jan 22, 2021

Issue Type

Book Built Issue IPO

Face Value

₹10 per equity share

IPO Price

₹1488 to ₹1490 per equity share

Market Lot

10 Shares

Min Order Quantity

10 Shares

Listing At

BSE, NSE

Issue Size

Eq Shares of ₹10 aggregating up to ₹1,176.00 Cr

Fresh Issue

Eq Shares of ₹10 aggregating up to ₹300.00 Cr

Offer for Sale

5,840,000 Eq Shares of ₹10 

Indigo Paints IPO Tentative Timetable

The open date and close date of the Indigo Paints IPO is Jan 20, 2021, and Jan 22, 2021, respectively. The issue may list on Feb 2, 2021.

IPO Open Date

Jan 20, 2021

IPO Close Date

Jan 22, 2021

Basis of Allotment Date

Jan 28, 2021

Initiation of Refunds

Jan 29, 2021

Credit of Shares to Demat Account

Feb 1, 2021

IPO Listing Date

Feb 2, 2021

Objects of the Issue

The net proceeds from the Indigo Paints IPO will be used against the following objectives:

  • To encounter the capital expenditure requirements for manufacturing facility expansion at Pudukkottai, Tamil Nadu.
  • To purchase tinting machines and gyro shakers.
  • To repay all or certain borrowings.
  • To meet general corporate purposes.

Risk factors

  • The company is involved in a highly competitive business segment, and any malfunction in effectively competing could have a significantly unpleasant effect.
  • They may not be able to recognise or efficiently respond to changing preferences, expectancies or trends on time and a failure to get the desired benefits from its product development efforts may impact its market competitiveness and profitability.
  • Company does not enter into long-term agreements with its dealers and any breakdown in continuing present understandings could adversely affect its business and results of operations.
  • Their projected capacity enlargement plans involving its manufacturing plants are exposed to the risk of unsuspected interruptions in implementation and cost overruns.
  • A substantial share of company sales comes from the state of Kerala and any unfavourable developments in this market could badly affect its business.

Final Thoughts

Indigo Paints is one of the fastest-growing paint companies in India, and it has displayed strong income and margin growth in recent years.

Considering the present-day bull run, investors can invest in listing gains along with for the short term. However, as always, it is always advisable to consider both the strengths and risks associated with Indigo Paints before investing into its IPO and then make a mindful decision.

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