The stock was listed at Rs 2607.50, with a 75 per cent premium over its issue price of Rs 1490 apiece. The initial public offering (IPO) to raise around Rs 1,176 crore was subscribed 117 times with a price band of Rs 1,488– Rs 1,490 in the three-day share sale that closed on 22 January. The IPO comprised new equity shares aggregating to Rs 300 crore by the company and an offer for sale of up to 5.84 million shares, or 12.81 per cent, by Sequoia Capital India (SCI) Investments IV, SCI Investments V, and promoter Hemant Jalan.

Indigo Paints proposed to utilize the net proceeds of the share sale by allocating Rs 150 crore towards funding capital expenditure for expansion of its existing manufacturing facility at Pudukkottai, Tamil Nadu, by setting up an additional unit adjacent to the existing facility. Another Rs 50 crore will be utilized for the purchase of tinting machines and gyroshakers, Rs 25 crore towards repayment/prepayment of all or certain company’s borrowings, and the remaining towards general corporate purposes. Over FY18-20, Indigo’s revenue/EBITDA/ net profit grew at a CAGR of 25%/88%/84% respectively while EBIITDA margins expanded 814 basis points (bps) to 14.6%. “It enjoys lean working capital cycle of 25 days and a healthy return on equity (RoE) / return on capital employed (RoCE) of 28% and 23% respectively. The net debt/equity as of September stood at 0.1 times which post IPO will reduce to zero. The issue is valued at 11.3 times FY20 market cap/sales,” said Motilal Oswal Financial Services.

Indigo Paints is the fifth-largest company in the decorative paint industry in India in terms of its revenue from operations for FY20. As on 30 September, the firm owned, operated three manufacturing facilities in Jodhpur (Rajasthan), Kochi (Kerala), and Pudukkottai (Tamil Nadu). These facilities had a total installed production capacity of 101,903 kilolitres per annum for liquid paints and 93,118 tonnes per annum for putties and powder paints. The company has an extensive distribution network across 27 states and seven Union territories as of September.