Paint company is looking to raise ~₹ 1,169 crores through capital markets. | Roped in Mahendra Singh Dhoni as brand Ambassador
Indigo Paints Ltd. (Indigo), Pune based paints company established in 2000 is engaged in the business of manufacturing and distribution of paints. Company is amongst the top five paint companies in India. Company is the fifth largest company in the Indian decorative paint industry in terms of revenue from operations for Fiscal 2020 (Source: F&S Report)
| IPO Opens | IPO Closes | Price Band (₹/Sh) | Listing Date |
|---|---|---|---|
| 20-Jan-2021 | 22-Jan-2021 | 1,488 to 1,490 | 2-Feb-2020 |
Indigo Paints manufacture a complete range of decorative paints including emulsions, enamels, wood coatings, distempers, primers,
putties and cement paints. It is first company to manufacture and introduce certain differentiated products in the decorative paint market in India, which includes 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 (together, “Indigo Differentiated Products”) (Source: F&S Report).
Company owns and operate three manufacturing facilities located in Jodhpur (Rajasthan), Kochi (Kerala) and Pudukkottai (Tamil Nadu) with an aggregate estimated installed production capacity of 101,903 kilo litres per annum (“KLPA”) for liquid paints and 93,118 metric tonnes per annum (“MTPA”) for putties and powder paints.
Indigo Paints markets its products under brand of “Indigo”, creating an extensive distribution network across 27 states and seven union territories as of September 30, 2020, and installing tinting machines across network of dealers. To create demand for differentiated products, initially tapped into Tier 3, Tier 4 Cities, and Rural Areas. Company intend to expand manufacturing capacities at Pudukkottai facility in Tamil Nadu, by adding capacities to manufacture water-based paints to cater to the growing demand for these paints. The proposed installed production capacity of the expansion unit is 50,000 KLPA and it is expected to be operational during Fiscal 2023.
Through this IPO, Indigo Paints is looking to raise ₹ 1,169 Crores primarily for 1) Funding capital expenditure for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu by setting-up an additional unit adjacent to the existing facility; 2) Purchase of tinting machines and gyroshakers 3) Repayment/prepayment of all or certain of borrowings 4) General corporate purposes.
Company has engaged Mahendra Singh Dhoni, a sportsperson with pan-India appeal, as a brand ambassador, to enhance brand image amongst end customers.
Company owns and operate three manufacturing facilities located in Jodhpur (Rajasthan), Kochi (Kerala) and Pudukkottai (Tamil Nadu) with an aggregate estimated installed production capacity of 101,903 kilo litres per annum (“KLPA”) for liquid paints and 93,118 metric tonnes per annum (“MTPA”) for putties and powder paints.
Indigo Paints markets its products under brand of “Indigo”, creating an extensive distribution network across 27 states and seven union territories as of September 30, 2020, and installing tinting machines across network of dealers. To create demand for differentiated products, initially tapped into Tier 3, Tier 4 Cities, and Rural Areas. Company intend to expand manufacturing capacities at Pudukkottai facility in Tamil Nadu, by adding capacities to manufacture water-based paints to cater to the growing demand for these paints. The proposed installed production capacity of the expansion unit is 50,000 KLPA and it is expected to be operational during Fiscal 2023.
Through this IPO, Indigo Paints is looking to raise ₹ 1,169 Crores primarily for 1) Funding capital expenditure for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu by setting-up an additional unit adjacent to the existing facility; 2) Purchase of tinting machines and gyroshakers 3) Repayment/prepayment of all or certain of borrowings 4) General corporate purposes.
As of March 31, 2018, 2019, and 2020, distribution network comprised 33, 33 and 36 depots, and 9,210, 10,246 and 11,230 Active Dealers in India, respectively. As of March 31, 2018, 2019 and 2020, the total number of tinting machines that we placed across network of dealers was 1,808, 3,143 and 4,296, respectively.
Promoters of Indigo Paints are Hemant Jalan, Anita Jalan, Parag Jalan, Kamala Prasad Jalan and Halogen Chemicals.
Revenue from operations have grown at a CAGR of 41.9% between Fiscal 2010 and Fiscal 2019, compared to the range of 12.1% to 13.1% recorded by the top four paint companies in India. revenue from operations have grown by 16.65% between Fiscal 2019 to Fiscal 2020
Domestic sales from South, East, West and North constitutes 46.3%, 28.9%, 13.8% and 10.9% respectively.
Indigo Paints has recorded an EBITDA at 14.6% in line with the EBITDA recorded by the top three players, i.e. Asian Paints, Berger Paints and Kansai Nerolac each reporting an EBITDA of 22.4%, 16.8% and 15.8% respectively. Domestic sales from South, East, West and North constitutes 46.3%, 28.9%, 13.8% and 10.9% respectively.
About Industry
The decorative paints segment represents around 74% of the overall paint market in India and includes wall finishes for interior and exterior use, enamels, wood finishes and ancillary products such as primers and putties. The decorative segment has grown at a CAGR of 11.5% from Fiscal 2014 to Fiscal 2019, driven by the increase in consumption of paints in Tier 2 – 4 Cities, that account for nearly half the total sales. The Indian decorative paints market is expected to grow at a CAGR of approximately 13% in terms of value and 10.2% in terms of volume through 2024.
Key Pointers
- Track record of consistent growth in a fast growing industry with significant entry barriersg
- Differentiated products leading to greater brand recognition and enabling expansion into a complete range of decorative paint products
- Focused brand-building initiatives to gradually build brand equity
- Extensive distribution network for better brand penetration
- Leveraged brand equity and distribution network to populate tinting machines
- Strategically located manufacturing facilities with proximity to raw materials
Key Management
| Hemant Jalan | CMD |
| Chetan Bhalchandra Humane | CFO |
| Thundiyil Surendra Suresh Babu | Chief Operating Officer |
| Varghese Idicul | Vice President – Technical |
| Sujoy Bose | CS & Compliance Officer |
Indigo Paints IPO Snapshot
| Issue Open | 20-Jan-2021 |
| Issue Close | 22-Jan-2021 |
| Face Value | ₹ 10/- |
| Price Band | ₹ 1,488 to ₹ 1,490 (Including premium of ₹ 1,478 to ₹ 1,480 per share) |
| Discount | Nil |
| Bid Lot | 10 shares and in mutiples |
| Listing on | BSE and NSE |
| Mode of Payment | UPI / ASBA (Mandatory); Applications using third party UPI/ASBA Bank accounts are liable to rejected |
Indigo Paints Issue & Subscribed Details
| Particulars | Issued | Subscribed |
|---|---|---|
| Issue Size | ₹ 1,169 Crores (Upper Band) | ₹ - Crores |
| QIB Portion | ~50% | 189.57 times |
| NII Portion (Application for lot size of 15 & above) | ~15% | 263.05 times |
| Retail Portion (Applications for lot size between 1 & upto 15) | ~35% | 15.93 times |
| Employees Portion | - | 2.50 |
| Total | 100% | 117.02 times |
Indigo Paints IPO Indicative Dates
| Issue Open | 20-Jan-2021 |
| Issue Close | 22-Jan-2021 |
| Anchor Investor Bidding | One working day prior to Issue opening date of 20-Jan-2021 (around 19-Jan-2021) |
| Announcement of Allotment | 28-Jan-2021 |
| Initiation of Refunds | 29-Jan-2021 |
| Credit of Shares | 1-Feb-2021 |
| Listing (Commencement of trading on Stock Exchanges) | 2-Feb-2021 |
Lead Managers of Indigo Paints IPO
List of Book Running and Lead/Co-Lead Manager/s
| Kotak Mahindra Capital Company Limited |
| Edelweiss Financial Services Limited |
| ICICI Securities Limited |
Registrar of Indigo Paints IPO
| Link Intime (India) Private Limited |
Valuation
Company is looking at the following valuation
| Issue Size | ₹ 1,169 Crores (Upper Band |
| Pre-Issue Promoter's Holding | 60.05% |
| Post Issue Promoter's Holding | TBA% |
| Pre-Issue Shares | TBA Crores |
| Post Issue Shares | TBA Crores |
| Post Issue Market Cap (based on Price band) | ₹ TBA to ₹ TBA Crores |
Address of Indigo Paints
| Name | Indigo Paints Limited |
| Corporate Identity Number | U24114PN2000PLC014669 |
| Contact Person | Sujoy Bose, Company Secretary and Compliance Officer |
| Registered and Corporate Office | Indigo Tower, Street-5, Pallod Farm-2, Baner Road, Pune 411 045, Maharashtra, India; Tel: +91 20 6681 4300 |
| Website | www.indigopaints.com |
| secretarial@indigopaints.com |
Check Allotment Status of Indigo Paints IPO
| Please check below or visit here or Link 2 to check allotment status of IPO |
Source: DRHP, RHP, Company, Company Website | Logo/Images published in the article may be copyright of respective companies.
Frequently Asked Questions (FAQ)
| Q. How to Apply for IPO ? A. IPO can be applied Online and Offline mode. Online: a) Via Net banking of Bank website b) Via Stock brokers portal Offline: a) Collect application forms from Brokers > Fill demat details & UPI > Submit to any broker across India. b) Download forms from NSE/BSE website > Fill demat details & UPI > Submit to any broker across India. |
| Q. How to register for BHIM UPI? UPI is made mandatory by SEBI to apply for IPO's. To educate investors National Payment Corporation of India (NPCI) has come out with the useful video. This video educates on how to download BHIM UPI app and its process to register. Source: NPCI |
| What is UPI based ASBA Process ? To educate people to apply for IPO's National Payment Corporation of India (NPCI) has come out with the useful video. This video educates consumers on how the IPO process works and how subscribing for IPOs via BHIM UPI helps reduce the time and effort one needs to take for the same. Source: NPCI |
| Q3? Ans Source: NPCI |
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