IPO of Indigo Paints opens next week

Paving the way for its much-awaited debut on Dalal Street, Indigo Paints in its initial public offering (IPO) will open for subscription next week.

The 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 wants 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. Last year, as many as 15 companies made stock market debuts.

The public issue of Indigo Paints 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 intends 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 who owns 1.02 crore equity shares in the firm will reduce his stake by 16.7 lakh shares.

Face value of the equity shares has been set at Rs 10 a piece 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.

Indigo Paints is the fifth-largest company in the Indian decorative paint industry in terms of revenue from operations for fiscal year 2020.

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.