Indigo Paints IPO: Here’s All You Need To Know
A day labourer holds a paint roller in Noida, Uttar Pradesh, on Jan. 20, 2020. (Photographer: Prashanth Vishwanathan/Bloomberg)

Indigo Paints IPO: Here’s All You Need To Know

Indigo Paints Ltd. will launch its three-day initial public offering on Wednesday as investors seek a partial exit and the company looks to expand production capacity, pare debt.

The paintmaker’s maiden offer comprises a fresh equity issue worth Rs 300 crore and an offer-for-sale of Rs 870.16 crore by Sequoia Capital India Investments IV, SCI Investments V and promoter Hemant Jalan. The price band has been fixed at Rs 1,488-1,490 apiece, according to its red herring prospectus.

  • Issue opens on: Jan. 20
  • Issue closes on: Jan. 22
  • Face value: Rs 10 apiece
  • Minimum Bid: 10 shares

The company will use Rs 150 crore from the proceeds of the fresh issue to expand its existing manufacturing facility at Pudukkottai, Tamil Nadu; Rs 50 crore to purchase equipment and Rs 25 crore to repay debt and general corporate purposes. The contribution of the southern market to the company’s FY20 revenue, according to the red herring prospectus, stood at 46.33%.

Kotak Mahindra Capital Co. Ltd., Edelweiss Financial Services Ltd. and ICICI Securities Ltd. are the book-running lead managers to the issue.

This comes at a time when the participation of retail investors in equity markets in India and around the world has increased following the pandemic-induced lockdowns. The domestic benchmarks, too, are scaling new peaks.

Anchor Allocation

Indigo has raised Rs 347.92 crore through anchor allotment by issuing 2,335,020 equity shares at the upper end of the price band of Rs 1,490 apiece. The anchor allotment has been made to 25 entities, including eight mutual funds.

Shareholding Pattern

Promoters own 60% in Indigo Paints’, while the rest is held by non-promoter and public. After the share sale, non-promoter and public shareholding will increase to 46%.


Indigo Paints was India’s fifth-largest by revenue from operations in the decorative paints segment in 2019-20. The company has built a distribution network across 27 states and seven union territories as of September 2020, and has installed tinting machines across its network of dealers.

As of Sept. 30, the company had 10,988 dealers. “In the next five-six years, we would like to approach the dealer strength of the No. 2 and 3 players,” Jalan, chairman and managing director at Indigo Paints, told BloombergQuint in an interview before the IPO’s launch.

Berger Paints India Ltd., the nation’s second-largest paintmaker with a 12% market share in the decorative segment, has 30,000 active dealers, while Kansai Nerolac Paints Ltd. has a 7% share and 27,000 active dealers, Jalan said.

Besides, to create demand for its products, the company initially tapped into smaller towns and cities and rural areas, where brand penetration is easier and dealers have greater ability to influence customer purchase decisions. The paintmaker then leveraged this network to engage with dealers in tier-1 and 2 cities and metros.

As of September 2020, Indigo Paints owned and operated three manufacturing facilities in Jodhpur (Rajasthan), Kochi (Kerala) and Pudukkottai (Tamil Nadu), with an aggregate estimated installed production capacity of 101,903 kilolitres per annum for liquid paints and 93,118 metric tonnes per annum for putties and powder paints.

  • Indigo Paints’ advertisement and sales promotion expenses in FY18, FY19 and FY20 have been relatively high and represented 11.22%, 12.63%, and 12.65%, respectively, of its revenue from operations in these years.
  • The advertising and promotion spend as a percentage of revenue from operations for the top four paintmakers were in the range of 3.8-5.8% in FY18, 3.1-5.0% in FY19, and 3.3-5.0% in FY20, Indigo paints said in its red herring prospectus.

But while advertising expenses will grow in the future, Jalan said it will grow at a modest pace.


The company, according to Jalan, saw a relatively lesser fall in revenue than peers as smaller towns and rural areas had fewer Covid-19 cases. Business activity, he said, wasn’t impacted as much due to the pandemic.

Peer Comparison

The Rs 40,300-crore Indian decorative paints space is dominated by Asian Paints Ltd., Berger Paints India Ltd., Kansai Nerolac Paints Ltd. and Akzo Nobel India Ltd., which collectively own 66% of the market. Indigo Paints own 2% of the decorative paints segment.

While Indigo Paints completely focuses on the decorative paints segment, that for Asian Paints account for 95-97% of revenue.


  • The continuing impact of the Covid-19 pandemic.
  • Inability to identify or effectively respond to evolving preferences.
  • Inability to enter into new relationships with dealers and painters.
  • Not being able to enter into long-term arrangements with dealers.
  • Under-utilisation of its manufacturing capacities.
  • A significant portion of its sales are derived from Kerala, and any adverse development in this market could adversely affect business.

Research Reports On Indigo Paints IPO

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