Premium of shares of Indigo Paints in grey surges over 50 pc ahead of IPO

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By Ashish Mitra --
Tuesday, 19 Jan, 2021

A day before its IPO opening, shares of Indigo Paints were trading with a 54.36 per cent premium over the IPO price in the grey market today. The shares of the fifth-largest company in the decorative paint industry were trading at Rs. 2,300 up Rs. 810 from the issue price.

Analysts were of the view that at the higher end of the price band, Indigo Paints IPO is aggressively priced at a PE ratio of 142 times FY20 earnings per share. This is similar to its highly valued listed peers Asian Paints (115) and Berger Paints India (126).

They also added that Indigo Paints has a better growth potential due to its lower base and market share. Indigo Paints IPO comprises fresh issue of stocks worth Rs 300 crore and an OFS of up to 58.40 lakh equity shares by private equity firm Sequoia Capital, through its two funds – SCI Investments IV and SCI Investments V – and promoter Hemant Jalan. The shares are proposed to be listed on both BSE and NSE.

Most of the brokerage houses have recommended to ‘subscribe’ to the issue as Indigo Paints enjoys early mover advantage in floor painting, with the growing sale of differentiated products which yields higher margin.

Premium of shares of Indigo Paints in grey surges over 50 pc ahead of IPO. A day before its IPO opening, shares of Indigo Paints were trading with a 54.36 per cent premium over the IPO price in the grey market today. The shares of the fifth-largest company in the decorative paint industry were trading at Rs. 2,300 up Rs. 810 from the issue price.

Analysts were of the view that at the higher end of the price band, Indigo Paints IPO is aggressively priced at a PE ratio of 142 times FY20 earnings per share. This is similar to its highly valued listed peers Asian Paints (115) and Berger Paints India (126).

They also added that Indigo Paints has a better growth potential due to its lower base and market share. Indigo Paints IPO comprises fresh issue of stocks worth Rs 300 crore and an OFS of up to 58.40 lakh equity shares by private equity firm Sequoia Capital, through its two funds – SCI Investments IV and SCI Investments V – and promoter Hemant Jalan. The shares are proposed to be listed on both BSE and NSE.

Most of the brokerage houses have recommended to ‘subscribe’ to the issue as Indigo Paints enjoys early mover advantage in floor painting, with the growing sale of differentiated products which yields higher margin.