Indigo Paints IPO opens next week as Sequoia Capital, promoter look to trim stake; check details

Indigo Paints initial public offering (IPO) will open for subscription next week, paving the way for its much-awaited debut on Dalal Street. Sequoia Capital-backed Indigo Paints IPO, which received a go-ahead from Securities and Exchange Board of India (SEBI) earlier this month, will open for subscription on January 20 and close on January 22. The paints manufacturer is looking to raise Rs 1,000 crore from the capital markets with a combination of fresh issuance and an offer for sale (OFS) by existing shareholders of the company. This will be among the first few IPOs of 2021. In the previous year 2020, as many as 15 companies made stock market debuts.

Indigo Paints public issue will consist of a Rs 300 crore fresh issue of equity shares and an OFS of 58.4 lakh equity shares. The existing shareholders looking to sell part of their stakes in Indigo Paints include venture capital firm Sequoia Capital, SCI Investments, and promoter Hemant Jalan. While Sequoia is looking to sell 20 lakh equity shares of the 85.34 lakh shares it currently owns, SCI Investments will offload 21.65 lakh stocks from the 92.08 lakh currently held. Hemant Jalan owns 1.02 crore equity shares in the firm and will reduce his stake by 16.7 lakh shares. Indigo Paints has not disclosed the issue price of its IPO so far. However, it is likely to be in the range of Rs 1480-1500 per share, two traders dealing in unlisted shares told Financial Express Online.

Face value of the equity shares has been set at Rs 10 apiece by Indigo Paints. The firm will not receive any funds from the OFS proceeds. However, from the fresh issue proceeds, Indigo Paints plans to fund capital expenditure for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu. Along with this, it plans to purchase tinting machines and gyroshakers and repay/prepay all or certain borrowings of the firm.

Indigo Paints is the fifth-largest company in the Indian decorative paint industry in terms of the revenue from operations for fiscal year 2020. “The company has achieved this position in a highly competitive Indian decorative paint industry on the back of their multi-pronged approach,” said Axis Securities in a note. Indigo Paints has an extensive distribution network across 27 states and seven union territories.

Financially, the company reported a net profit of Rs 27.21 crore at the end of September last year. Revenue from operation during the same period stood at Rs 259.42 crore. During the financial year 2020, Indigo Paints reported a revenue of Rs 624.79 crore and a net profit of Rs 47.82 crore.