To Subscribe or not to Subscribe, That is the Question
Indigo paints, India’s fifth largest paint manufacturer launched their IPO valued at Rs. 1000 crores on 20th of January, 2021. With a steadily increasing hype in terms of IPOs since the last year, it was no surprise when Indigo’s IPO was oversubscribed on day 1, with subscriptions starting even before it launched.
The issue price of the shares is officially set to around Rs.1488-Rs.1490, with a minimum buying lot of 10 shares. While over on the grey market the share is in so much demand that it is valued at Rs.800-Rs.810 over the actual price.
Indigo paints is one of the oldest paint companies from India and the fifth largest. Although the company is operating at 2% market share only, their profits have quadrupled over the past few financial seasons.
After IRFC launched their IPO earlier in the month, Indigo paints is the second IPO of the year. With demand for IPOs increasing and more conglomerates like Zomato wanting to enter the market, this year looks to be going well for new investors. This IPO is available to subscribe up until the 22nd of January.
Indigo paints plan on using the collected funds for growth purposes by expansion of their existing manufacturing facility in Tamil Nadu, while also purchasing machines like gyro shakers and tinting machines. The remaining amount would be used for repayment of borrowings.
Indigo paints are also ready to offer 98.5 times its earnings when we talk in terms of price to earnings ratios. These ratios help tell what the market is actually willing to pay for the share of your company by analysing the share price and earnings off the share. This would put Indigo on third in terms of P/E Ratio under Asian and Berger.
With Indigo paints having a great few years financially, it's not a surprise that their IPO got oversubscribed on day 1. The paint house with a minimalist share in the market has managed to increase their sales and profits over the past decade immensely, making it a hot target for investors.