Indigo Paints

IPO Size

`1,170.16 Cr

Price Band

`1480-1490 Per Share

Minimum Lot Size

10 Share

Face Value

`10 Per Share

Employee Discount

`148 Per Share

Retail Allocation


Issue Open Date

20 Jan 21

Issue Close Date

22 Jan 21

Listing Date

02 Feb 21

About the Company:

Backed by the Government of India, Indian Railway Finance Corporation (IRFC) was set up on 12th December, 1986 as the dedicated financing arm of the Indian Railways for mobilizing funds from domestic as well as overseas Capital Markets. The primary objective of IRFC is to meet the predominant portion of ‘Extra Budgetary Resources’ (EBR) requirement of the Indian Railways through market borrowings at the most competitive rates and terms. The Company’s principal business therefore is to borrow funds from the financial markets to finance the acquisition / creation of assets which are then leased out to the Indian Railways. IRFC has also been lending to various entities in Railway sector like Rail Vikas Nigam Limited (RVNL), Railtel, Konkan Railway Corporation Limited (KRCL), Pipavav Railway Corporation Limited (PRCL) etc.

Outstanding Litigation:

S.No. 1 - Company 2 - Directors 3 - Promoters
Entity Name By the Company Against the Company By the Director Against the Director By the Promoter Against the Promoter
Criminal cases - - - - - -
Material civil cases 19.62 - - - - -
Taxation matters - 266.96 - - - -
Regulatory Procedings - 2.28 - - - -
Amt. (In Million Rs.) 19.62 269.24 - - - -

Financial Statements:

Income Statement (In millions) FY20 FY19 FY18
Gross Operating Income 6264.36 5372.62 4031.05
Cost of Employee & Inventory 3639.52 3349.07 2679.37
Other Expenses 1698.52 1466.3 1077.37
EBITDA 926.32 557.25 274.31
Depreciation 196.1 170.54 90.24
Interest  55.95 46.56 45.37
Profit Before Tax 674.27 340.15 138.7
Exceptional Items - 3.05 13.16
 Tax 196.12 68.4 -3.08
Profit After Tax 478.15 268.7 128.62


As per CA Ajay Chouhan, SEBI Registered Research Analyst, recommendation is to ‘Subscribe’ for ‘Listing Gains and for ‘Long Term’ too. Backed by Sequoia capital, the Indigo paints belong to an industry whose every company has made fortune for its investors. An industry that is highly penetrated, promises less perpetual growth rate but still deserves higher valuations due to their rich cash flows, attractive margins and oligopolistic market. On the financials front, revenues from direct operations of the company grew at 24.76% and expected to grow further due to their expansion plans. Earning per share (EPS) of the company is almost doubled. The company is going to payout their borrowings from the net proceeds of fresh issue that will increase their EBT, reduce their cost of equity capital and henceforth will increase earnings for the shareholders. The company is demanding a P/E multiple of 139.6x (considering the FY20 earnings and the upper price band) much higher than the Industry P/E multiple of 89x. Still, there is more room for fundamentals to grow in future.

Promoter of the Company

The promoters of the company are Hemant Jalan, Anita Jalan, Parag Jalan, Kamala Prasad Jalan, Tara Devi Jalan and Halogen Chemicals Private Limited.

Peer Comparison

In the listed space, the company will face tough competition from Asian Paints, Berger Paints, Akzo Nobel and Kansai Nerolac. Paint companies occupy healthy premium in the market due to their short cash conversion cycle and FMCG attribute.

Objectives of the Issue

Offer for Sale

The object of the Offer for Sale is to allow the shareholders to sell an aggregate of up to 58,40,000 equity Shares held by them. The company will not receive any proceeds from the Offer for Sale. Offer for Sale Size is of 5.84 million equity Shares aggregating up to ₹1,170.16 Cr (at an upper price band of Rs. 1,490).

Fresh Issue

The company has planned to raise fresh capital comprising an aggregate of 20,13,422 equity shares having Face Value ₹10 aggregating up to Rs. 300 Cr at the upper price band of Rs. 1,490. The net proceeds will be utilized for meeting the capital expenditure requirements for manufacturing facility expansion at Pudukkottai, Tamil Nadu amounting at Rs. 150 crores. The purchase of tinting machines and gyro shakers will cost Rs. 50 crores and payout of borrowings that stood at Rs. 25 crores. Residual will augment general corporate purpose.

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