Indigo Paints shares open at Rs 2,607.50, listed at 75 percent premium over issue price

The IPO of Indigo Paints was subscribed over 100 times. Image credit: indigopaints.com

Shares of Indigo Paints, India’s fifth-largest company in the decorative paints segment, listed at Rs 2,607.50 apiece on the National Stock Exchange (NSE), a 75 percent premium over the issue price of Rs 1,490 per share. The stock opened at Rs 2,607.50 on the Bombay Stock Exchange (BSE).

Experts opined the listing premium of the paint company could be around 50 percent over the issue price following the strong subscription its public offer received.

Indigo Paints, which owns about 2 percent of the Rs 40,300-crore decorative paints industry, raised Rs 1,170 crore via its initial public offer (IPO) which ran between 20 and 22 January. The IPO was subscribed 117 times.

The public issue received bids for 64.58 crore shares at the end of the third day as against the issue size of 55.18 lakh shares. The IPO comprised fresh issuance of Rs 300 crore and an offer-for-sale of up to 58,40,000 equity shares by promoters as well as investors.

Following fast growth in the last decade compared to fellow players in the market, most brokerage houses had recommended subscribing to Indigo Paints IPO. Its expansion programme, cost-controlling measures, and lowering of debt have also kept the analysts positive on the IPO.

The company is expected to utilise fresh issue proceeds for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu by setting up an additional unit adjacent to the existing facility (Rs 150 crore), purchase of tinting machines and gyroshakers (Rs 50 crore), and repayment certain of borrowings (Rs 25 crore).

Indigo Paints has grown at a 42 percent compound annual growth rate (CAGR) between 2010 and 2019 as against a 12-13 percent CAGR recorded by top four players – Asian Paints, Berger Paints, Nerolac, and Akzo.