Indigo Paints IPO: Consolidated Brokerage Views

This post on Indigo Paints IPO attempts to bring out consolidated brokerage views , subscription information, Grey Market Premium (GMP) and anchor investor information where applicable. The information collated from various sources and reports in public domain can help investors to decide whether they should subscribe to Indigo Paints IPO or not.

Related Posts : Indigo Paints IPO Review

Indigo Paints IPO: Grey Market Premium etc.

  • 21-01-21 GMP Rs. 890
  • 20-01-21 GMP Rs. 860
  • 19-01-21 GMP Rs. 830

Subscription: Indigo Paints IPO ( x times)

Day / X timesQIBNIIRetailEMPTotal 
Day 3
Day 23.865.3810.311.817.34
Total Retail  Applications  ~ 1947888
Appl wise Retail7.16 x

Consolidated Brokerage Views on Indigo Paints IPO

Angel Broking :”Company’s revenue from operations have grown at a CAGR of 41.9% between Fiscal 2010 and Fiscal 2019, compared to the range of 12.1% to 13.1% recorded by the top four paint companies in India. There is further scope left for the company to improve EBIDTA margins due to operating leverage especially inthe cost of advertisement expense. Issue is priced at 98.4x PE on a trailing basis in terms of fully diluted EPS, which we believe is quite reasonable by looking at the future growth prospects of the company. We are positive on the long term prospects of the industry as well the company, we recommend”SUBSCRIBE” to the Indigo Paints IPO for long term as well as for listing gains.”

Capital Market : ” Score 45/100 ; At the higher price band of Rs. 1490, the offer is made at around 98.6 times its TTM EPS of R 15.1 for the period ended September 30, 2020 on a post-issue equity share capital of R 47.57 crore of face value of Rs. 10 each. Listed industry peers of the company are Asian Paints, Kansai Nerolac, Akzo Nobel and Berger Paints. But with higher growth rate and margin expansion along with given expansion program, increasing brand awareness, debt reduction can help the company report higher profits going forward. With scale and rapid growth, ad spend will grow slower than business growth, as it is already on the higher side at around 12.7% compared to peers at around 5.3% and is likely lead to better margin”

Choice Broking: “At the higher price band of Rs. 1,490 per share, the company’s share is valued at a TTM P/E multiple of 102.7x (to its restated TTM EPS of Rs. 14.5), which is in-line to the peer average.Already the peers are trading at steep valuations (premium to five years average) and trying to replicate the trading multiples of FMCG companies. We feel that, most of the positivity (related to the paint sector) is being captured in the prevailing valuations and thus we have a cautious outlook. Indigo Paint is very small as compared to the top four players, however the demanded valuation seems to factor-in the future growth prospects thereby providing limited price appreciation opportunities for the retail investors. Thus we assign a “Subscribe with Caution” rating for the issue.”

Dalal Street Investment Journal: “issue seems to be fairly priced purely from a valuation perspective. Nonetheless, looking at the past growth rate of the company (almost twice the industry average) and potential to maintain its growth rate further looking at the minuscule market share of two per cent, we advise aggressive investors to subscribe the issue with limited exposure.”

Geojit :“At the upper price band of Rs.1,490, IPL is available at P/E of 130x (annualized basis on FY21E EPS of Rs.11.4) and seems to be at a premium compared to the listed peers. Inspite of premium valuations, being the fastest growing paint company in India driven by developing niche product to compete market leaders, extensive distribution network, expansion plans, low debt & strong return profile with RoE of 25% in FY20 will make it an emerging player in the industry, we assign a “Subscribe” rating for the issue.”

HEM Securities: “Indigo Paints is the fifth largest company in Indian decorative paint industry in terms of revenue from operations in fiscal 2020.Company has created brand “ Indigo” on back of multi pronged approach strategies. We are optimistic on growth prospects of company , recommending investor to subscribe the issue for short & long term.”KR Choksey: At the price band of Rs345-350, the Indigo Paints issue comes priced at a PE of 18.2x-18.5x annualised 1QFY21 EPS. This appears to be reasonable, given the healthy growth being witnessed by the firm, its strong clients relationships across the board including with enterprises, MNOs and OTT operators, diverse client base across industry verticals, good financial track record and highly experienced promoter team. Given the impressive performance in 1QFY21, we believe there is a high probability of the company continuing to record impressive growth. We this recommend a SUBSCRIBE to the issue, with the potential for healthy listing gains.”

Religare : “We have a positive view on the company and it may see some listing gains too(depending upon the market condition). However, on the valuation front, the stock seems expensive as it is trading at a PE of 91x FY20 PAT, as compared to large listed players. We would advise investors to make fresh investments on dips once it gets listed.”

SMC : “The company is the fastest growing paint company and placed in the top five players in India. It is largely banking on differentiated products that are being introduced for the first time. Moreover, the Government schemes and policies like ‘Housing for All’ will also be a major driver for growth of fresh painting. With more such initiatives targeted for the regional population, the demand from smaller cities and towns is estimated to grow faster benefitting companies like Indigo Paints, which already has an established presence in these geographies. However, the issue looks expensive. Along term investors may opt the issue”

SP Tulsiyan Website: “Bullish outlook on paint sector, coupled with company’s strong margins and future growth make this small cap stock promising. We therefore recommend subscribing to the IPO, both from listing gains as well as long term portfolio holding.”

Standard disclaimer: I am not a SEBI registered analyst /investment adviser and above information is collated from various online sources and is for educational purpose only. Please visit individual brokerage sites to read the actual reports. Please do not make your investment decisions based on this info as it is not complete and exhaustive. Please do your own due diligence as stock market investments have high degree of inherent risk.

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