Indigo Paints IPO opens today, know what investors should do?

 Indigo Paints IPO is cheaper than other paint companies, know what is the opinion of brokerage house?

 Indigo Paints is the fifth largest decorative paint company in the country. The company's IPO opens today i.e. January 20 and will close on January 22. The price band of the company's issue is Rs 1488 -1490. The company wants to raise Rs 300 crore through its issue. In this issue, the company's promoter Hemant Jalan and investors are offering 58,40,000 crore shares. 

What should investors do?

Many brokerage houses are recommending investing in this IPO. He is giving this advice in view of the rapid growth of Indigo Paints compared to competing companies. It is the right choice for investment due to Indigo Paints' business expansion policy, expense reduction strategy, profit opportunities in the housing segment, lower expenses and better growth valuations than other companies in the paint segment.

According to IIFL Securities, "Despite the current negative environment in the paint sector, we are recommending investment in Indigo Paints." IIFL Securities has estimated that the company's sales growth will grow at 20 per cent CAGR from 2020 to 2023.

The brokerage firm said, "According to our estimates, the valuation of Indigo Paints will be at 46 P / E which is based on the issue's upper price band of Rs 1490. In comparison Asian Paints has a P / E of 63 and Berger Paints has a P / E of Rs. E is 77. In this way, the issue of Indigo Paints is cheaper. "

Indigo Paints IPO review (Subscribe for Long Term)

Know 10 important things related to this IPO

1. Indigo Paints is set to raise Rs 300 crore from the IPO. Under this, the promoters and investors of the company are selling 58,40,000 equity shares.

2. Talking about the existing investors of Indigo Paints, 20.05 lakh shares are being sold by Sequoia Capital Investment IV, 21.65 lakh equity shares SCI Investments V and 16.7 lakh equity shares are being sold by promoter Hemant Jalan.

3. The company's 70,000 equity shares are reserved for employees' subscriptions. The employees will get Indigo Paints shares at a discount of Rs 148 per share.

4. The price band of Indigo Paints has been fixed at Rs 1488-1490 per share. Any investor will have to bid for at least one lot. There will be 10 shares in a lot. According to this price band, the company can raise from 1,168.99 crore to 1,170.16 crore.

5. The company will use this fund to expand the manufacturing unit of Pudukkottai in Tamil Nadu. Apart from this, a separate plant will be set up at a cost of Rs 150 crore. The company will buy tinting machines and zeroshakers for Rs 50 crore. Apart from this, 25 crore rupees will be used for repayment.

6. Indigo Paints is among the top-5 paint companies in the country and its business is growing rapidly. The company sells its paints under the Indigo brand name. Its distribution network is spread across 27 states and 7 union territories. Former Indian cricketer Mahendra Singh Dhoni is its brand ambassador.

7. As of September 2020, the company has three manufacturing plants. The plant is located in Jodhpur in Rajasthan, Kochi and Pudukotai in Kerala. Its installed capacity is 1,01,903 kiloliters of liquid paint annually. In addition, it has an annual capacity of 93,228 MT in putty and powder paints. The company's lead manager of the issue is Kotak Mahindra Capital Company, Edelweiss Financial Services and ICICI Securities.

8. The promoters of the company are Hemant Jalan, Anita Jalan, Parag Jalan, Kamala Prasad Jalan and Halogen Chemicals Private Limited. In total, the promoters hold 2,73,56,615 equity shares, which is 60.05 per cent of the paid-up equity share capital of the company.

9. Hemant Jain is the managing director and chairman of the company. He has over 20 years of experience in the paint industry. Prior to this he was associated with AF Ferguson & Co as a consultant. He is currently the director of Halogin Chemicals.

10. Anita Jalan and Narayan Kutty are executive directors of the Kotidath Venugopal Board. Praveen Kumar Tripathi, Sunil Goyal, Ravi Nigam and Nupur Garg are the independent directors of the company.

Sakshi Chopra is the nominee director and Ravi Shankar Ganapathy Agraharam Venkataraman is the alternate director of Sakshi Chopra. Chetan Balachandra Humane is the Chief Financial Officer of the company. He was appointed Chief Financial Officer on 11 Mark 2020.

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