New IPO: Sequoia Capital-backed Indigo Paints plans Rs 1,000 cr public issue; files papers with SEBI

IPO Watch: Sequoia Capital-backed Indigo Paints has filed draft papers with capital markets regulator Securities and Exchange Board of India (SEBI) for a proposed Rs 1,000-crore IPO. The paints manufacturer and its shareholders are looking to raise the money by listing the company on the stock exchanges through the public issue, news agency PTI reported. Indigo paints will join a long list of companies that either made their stock market debut or are looking to do so this fiscal year.

Indigo Paints’ IPO will comprise a fresh issue of equity shares and an offer for sale (OFS) by existing shareholders, including Sequoia Capital, the US-based venture capital firm. The fresh issue component of the IPO will aggregate to Rs 300 crore, and the OFS would be for 58.40 lakh equity shares. Sequoia Capital, through its two funds SCI Investments IV and SCI Investments V, and promoter, Hemant Jalan, according to the draft red herring prospectus.

Indigo Paints proposes to use the IPO proceeds for the expansion of the existing manufacturing facility at Pudukkottai in Tamil Nadu, for purchasing of tinting machines and gyro shakers and repayment/prepayment of borrowings.

Indigo Paints, which started business in the year 2000, has a product portfolio including water-based paints like exterior emulsions, interior emulsions, distempers and primers. Indigo says it has a country wide presence. In the last financial year that ended March 2020, the company reported a total income of Rs 626 crore, up from Rs 537 crore recorded in financial year 2019. Net profit was reported at Rs 47.8 crore against Rs 26.8 crore on-year basis.

After listing, Indigo Paints will be in the company of peers like Asian Paints, Berger Paints, and Kansai Nerolac. While Asian Paints, a market leader, had a net profit of Rs 2,705 crore in the previous financial year, Berger Paints had a net profit of Rs 658 crore and Kansai Nerolac had a profit of Rs 521 crore.