Indigo Paints would possibly well be the 2nd public self-discipline to birth for subscription within the yr 2021 after the Indian Railway Finance Corporation IPO. Indigo Paints public provide will birth on January 20.
The maiden public self-discipline of the paints firm will shut on January 22. The bidding for anchor e book is anticipated to happen for a day on January 19.
Fairness shares are proposed to be listed on the BSE and NSE. Kotak Mahindra Capital Firm, Edelweiss Financial Companies and products and ICICI Securities are the e book running lead managers to the provide.
Listed below are 10 key things one will agree with to perceive sooner than subscribing the self-discipline:
1) About Public Area
The IPO comprises a fresh self-discipline of Rs 300 crore by the firm and a proposal for sale of 58,40,000 equity shares by promoters and merchants.
Investors - Sequoia Capital India Investments IV and SCI Investments V - are going to promote 20.05 lakh equity shares and 21.65 lakh shares, respectively by process of provide for sale, while the promoter Hemant Jalan will offload 16.70 lakh equity shares within the overall public self-discipline.
The provide entails a reservation of as much as 70,000 equity shares for subscription by workers of the firm. The eligible workers will get these shares a discount of Rs 148 per part.
One can build in minimal expose for 10 equity shares and in multiples of 10 equity shares thereafter.
2) Worth Band
The firm and merchants in session with merchant bankers has mounted the value band at Rs 1,488-1,490 per part for its public self-discipline.
3) Fund Raising
The firm targets to carry Rs 1,168.99 crore - Rs 1,170.16 crore at a tag band of Rs 1,488-1,490 per part.
4) Targets of the Area
The firm proposed to utilise the collect proceeds from its fresh self-discipline for expansion of the contemporary manufacturing facility at Pudukkottai, Tamil Nadu by environment up an additional unit adjoining to the contemporary facility (Rs 150 crore); secure of tinting machines and gyroshakers (Rs 50 crore); repayment sure of borrowings (Rs 25 crore); and total corporate capabilities.
The firm is no longer going to receive any proceeds from the provide for sale, that will mosey to selling shareholders.
Also learn: Indian Railway Finance Corporation IPO opens: Within the occasion you subscribe?
5) Firm Profile
Indigo Paints is the quickest rising amongst the tip five paint corporations in India. It is a long way mainly the fifth biggest firm within the Indian ornamental paint alternate when it comes to earnings from operations for FY2020, as per F&S Tale.
The firm sells its products under the emblem 'Indigo', through its distribution network at some stage in 27 states and 7 union territories as of September 2020. It engaged Mahendra Singh Dhoni, a sportsperson with pan-India allure, as its model ambassador, to enhance model portray amongst cease prospects.
The firm manufactures a total vary of decorative paints including emulsions, enamels, wood coatings, distempers, primers, putties and cement paints. As of September 2020, Indigo Paints owns and operates three manufacturing facilities positioned in Jodhpur (Rajasthan), Kochi (Kerala) and Pudukkottai (Tamil Nadu) with an combination estimated installed production ability of 1,01,903 kilo litres every year (KLPA) for liquid paints and 93,118 metric tonnes every year (MTPA) for putties and powder paints.
It also intends to amplify manufacturing capacities at its facility at Pudukkottai in Tamil Nadu, by including capacities to assemble water-based mostly totally mostly paints to cater to the rising inquire of for these paints. The proposed installed production ability of the expansion unit is 50,000 KLPA and it's anticipated to be operational at some stage in FY2023.
As of March 2018, 2019, and 2020, its distribution network comprised 33, 33 and 36 depots, and 9,210, 10,246 and 11,230 provocative sellers in India, respectively. In same sessions, the total number of tinting machines that it placed at some stage in network of sellers was once 1,808, 3,143 and 4,296, respectively.
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6) Strengths
a) The firm has note file of consistent dispute in a instant rising alternate with important entry boundaries.
b) It has differentiated products main to increased model recognition and enabling expansion into a total vary of decorative paint products.
c) It has strategically undertaken model-building initiatives to originate visibility with prudent consume of sources, step by step rising branding and marketing charges in step with the dispute of business.
d) It has an intensive distribution network for higher model penetration.
e) It has leveraged model equity and distribution network to populate tinting machines.
f) The firm has strategically positioned manufacturing facilities with proximity to raw materials.
g) It has successfully-qualified and educated management team with a dedicated employee crude.
7) Programs
a) It intends to proceed to focal point on environment up differentiated products to grow market part.
b) It intends to extra fortify the emblem to consolidate reveal as a main paint firm in India.
c) It goals to deepen penetration in contemporary markets and amplify presence in steal contemporary territories by populating tinting machines.
d) The firm intends to amplify manufacturing capacities to back the dispute efforts and consolidate pan-India presence.
8) Financials and Witness Comparability
Indigo Paints registered a earnings dispute at a CAGR of 25.8 p.c at some stage in FY2018-20, largely on yarn of stable dispute in classes reminiscent of putty, emulsion and distempers which grew at CAGR of 25-30 p.c over the same period. The execrable margins expanded to 48.5 p.c in FY2020 compared to 41.5 p.c in FY2018.
The operating earnings margin improved strongly from 6.5 p.c FY2018 to 14.6 p.c in FY2020 (and extra improved to 18.5 p.c in H1FY2021), which led to around 88 p.c dispute within the operating profits at some stage in FY2018-20. The earnings at some stage in same period grew by 84 p.c.
"Higher working capital management aided collect working capital days standing low at 20-23 days. The cash generation from operating activities improved by Rs 48.5 crore to Rs 72.23 crore over FY2018-20. Higher cash generation took care of the capex programme. Therefore debt: equity remained stable at 0.3x. The firm has stable return profile with RoE and RoCE (pre-IPO) standing at 24.2 p.c and 28 p.c respectively," Sharekhan mentioned.
Indigo Paints' IPO is valued at 148x its post-self-discipline FY20 EPS of Rs 10.05 (and 130x its annualised FY2021 EPS of around Rs 11.4), which is at top class to just a few the listed paint corporations, mentioned Sharekhan.
Within the paints alternate, the organised sector has a 67 p.c market part, while unorganised gamers withhold the leisure 33 p.c. Unless 2015, the unorganised sector had a market part of roughly 35 p.c, which has been penetrated by the organised sector in consequence of challenges confronted by smaller gamers reminiscent of demonetisation and implementation of GST.
9) Promoters and Shareholding
Promoters of the firm are Hemant Jalan, Anita Jalan, Parag Jalan, Kamala Prasad Jalan, and Halogen Chemical substances Non-public Restricted. The promoters, in combination, withhold 2,73,56,615 equity shares, representing 60.05 p.c of paid-up equity part capital of the firm.
10) Management
Hemant Jalan is the Managing Director and Chairman of the firm. He has over 20 years of abilities within the paint alternate. Previously, he was once associated with AF Ferguson & Co. as a consultant. Currently, he is associated with Halogen Chemical substances as a director.
Anita Jalan and Narayanan Kutty Kottiedath Venugopal are Executive Directors on the board. Praveen Kumar Tripathi, Sunil Goyal, Ravi Nigam and Nupur Garg are the self reliant directors of the firm.
Sakshi Chopra is the Nominee Director and Ravi Shankar Ganapathy Agraharam Venkataraman is the Alternate Director to Sakshi
Chopra.
Chetan Bhalchandra Humane is the Chief Financial Officer of the firm. He has been appointed as the Chief Financial Officer of the firm with attain from March 11, 2020. He has over 19 years of abilities in accounting and finance. Ahead of this, he was once associated with Jenson & Nicholson (I) Ltd.
