Indigo Paints IPO Details - Indigo Paints IPO Review, Date, Share Price | Next IPO 2021

Upcoming IPO 2021: In this IPO review of Indigo Paints, we look at Indigo Paints' IPO, price, price band, lot size, the business model of Indigo Paints, and its financial history. Are

Details of Indigo Paints IPO

Hello friends! After the IRFC, another IPO fell short. This is the IPO of Indigo Paints. This company belongs to the paint industry. After that, you may have a question.

We will talk in detail about Indigo Paints Company, the industry, the growth of the industry, the financial affairs of the company, and the professional affairs.

When investing in stocks, two things are important.

The first is the company's business. You need to know the business of the company you are investing in. In addition, you need to know the company's growth and target group.

Next, the second most important thing before investing in the context of the industry in which the company operates. It is important to understand these two things. So, first, we will discuss these two things.

Indigo Paints and its financial business

First, I'll tell you about the company and its business.

Let's talk about the top five companies in the decorative painting class in terms of revenue. Indigo is the fifth-largest company in this regard. Also, the most interesting data is that it is the fastest-growing of these 5 companies in the last year. It is important that you understand one thing here. If a company wants to succeed in the paint industry, it must have a wide distribution network. Suppose you live in a small town. When buying paint, you will prefer a store near your home. If you can't find this brand, the company won't be able to sell there. That is why it is said that paint companies should have a wide distribution network, such as the major paint companies: Asian Paint and Berger Paint.

Indigo has seen tremendous growth in recent days. Behind it is a wider network as well as its brand. Its distribution network is spread across 27 states and 7 central regions. The company's business started with smooth vanilla cement paints. After seeing opportunities in a decorative painting class, he moved his business there.

Development of Indigo Paint

Now let's talk about its growth.

They targeted Tier 3 and 4 cities because it was easier to get there from Tier 1 and 2 cities (as existing brands already existed). They targeted and infiltrated Tier 3 and 4 cities. After that, they also started branding their Tier 1 and 2 cities.

In paint, segment marketing and brand building are very important. The company also focuses on brand building. After that, he made Mahendra Singh Dhoni his brand ambassador to increase his reach. Now let's talk about the company's product range.

The company's main products are decorative paint class emulsions, enamels, wood coatings, sills, primers, bandages, and cement paints. These are the products that the company has developed under its own brand.

Indigo paint production plants

Now let's talk about company preparation. It has three production plants at Jodhpur, Kochi, and Padhukadai.

They have chosen their locations strategically because the raw materials used in the paintings are readily available at these locations. Because of this, the company saves freight costs, which in turn saves the company costs. So it was about the company's business. Now I will talk about the paint industry. I told him that it was important to know the industry after understanding the company.

There are many barriers to entering the paint industry. Barriers to entry mean that no new player can enter the industry and capture market share because the cost of capital (fixed price) is really high. In addition, it is important to mention the product sales network. Barriers to entry are high because many companies offer plain white. He installed a printing machine in the paint shop. Dealer stores usually have only one brand of machine. Going to other brands is a bit more difficult. Therefore, it is said that there are really many barriers to entry into this industry.

Capita painting

I will now talk about the use of paints and coatings per person.

It tells us how many kilograms of paint are used per person. In India, the figure is only 4.1 kg. But like any developed country like the United States, that number is over 15 kilograms.

Here it can be said that the per capita consumption of paint is much lower than in developed countries. In South Asian countries like Malaysia, the figure is 9 kg. This is double the current number in India. From this, you can understand that the per capita consumption of paint in other countries is much higher than in India.

CAGR growth

I will take it to my screen and discuss the recent growth of CAGR in the Decorative Paints section. As you can see on my screen. We have broken down decorative paint class products such as bandages, van scorching, distempers, primers, and so on. The market growth in 2014-2019 was 11.5% CAGR.

But the expected growth for 2019-2024 is 13 CRR. A lot of development is expected here. But we will learn about proper growth in the future.

Market shares

Let's talk about the market share of the industry players so that you can create a sense for the big people.

Asian Paints has a market share of 42%. After Burger Paints, Neurolock and ExxonMobil have a market share of 12%, 7%, and 5%, respectively.

So far, Indigo Paints has a 2% market share. The most interesting fact here is that other small players have a 33% market share. There may be an unorganized department. There is a huge opportunity for Indigo Paint to gain market share. But we will know in the future how this number will come out.

Now I will talk about another interesting thing. Whenever a new player enters the market, they have to spend a lot on advertising to enter the market.

Indigo Paints advertising costs more than 10% of total revenue. But compared to the big players in the industry, they اپنی - of their income. Spend 3-4%. This suggests that the company is spending a lot of money on advertising to gain a good market share.

Here I will tell you an interesting fact.

Material cost

The cost of manufacturing material of the product, ie, the cost of raw material for indigo paint is 51%. But that number is much lower than other players. The material cost of Asian Paints is ٪ 55. Berger Paints has 59 material costs.

In comparison, the lowest price of Indigo Paints is 2020. This can be a positive factor for the company.

Indigo Paint Finance

Now, let's move on to the company's finances. Let's talk about the company's revenue, assets, and profits.

As you can see on my screen, mine is number one for 2018. Here you can see that the company's revenue was Rs 403 million, while its profit was Rs 12 million. But in 2019, the company's revenue increased from Rs 403 crore to Rs 537 crore. Its profit almost doubled to Rs 26 crore.

The company's revenue (in 2020) was Rs 626 million and its profit increased 1.45 times to Rs 46 million. This year's semi-annual figures show that the company has a revenue of Rs 260 million and a profit of Rs 277 million. The company has also seen an increase in assets in recent years.

Indigo Paints Profitable Margin

Now we come to the part where we talk about the middle ground. The company's net operating margin is 18%. The net profit margin is about 10%.

The slight difference between the two is that the net operating margin is deducted only for the costs incurred during the manufacture of the final product. All other expenses are also deducted from the net operating margin. The company's return on equity is approximately 24.8%. This is a significant number.

Now let's talk about the P / E ratio.

This is definitely necessary. The P / E ratio of indigo paints is 141. While the P / E ratio of the paint industry is generally higher. The average number is around 75. Compared to the industry, Indigo paints have a higher P / E ratio. The debt-to-equity ratio in the company is 0.08.

This means that the company has a debt that it does not have. In the last two years, the CAGR profit has been close to 94%. Sales CAGR growth is 24.66%. This shows that the company has delivered a huge financial return to its investors in recent times.

Now let's talk about the pros and cons.

Indigo painting by profession and conspiracy.

The first sign for the company is that its financial performance has been remarkable in recent times. Its ROE number and other financial parameters have also been very good. Its P / E ratio is much higher than the industry.

The second important factor is the barrier to entry into the industry. There are really many barriers to entry. It is not possible for a new player to enter the market and disrupt the industry. When we look at the above figures, the chances are slim. But it is difficult to speculate about the future.

The third collaboration is that the company has developed a huge brand in recent days and is spending a lot on advertising to better insert and strengthen its brand in the future.

The next advantage is that per capita consumption (increase. by 1 kg) is more likely to increase. This number is currently much lower than in developed / developing countries.

If this number increases, all companies working in the paint sector will directly benefit. But an increase in that number will be known in the future. The second big point seen in this industry is low price competition. Prices have no effect on this industry. This can be seen as positive for the industry. Therefore, all companies operating in this sector have healthy margins.

Now let's talk about the cons.

The first is that if a company cannot establish its brand and increase its reach to the people, its market share will start falling. Indigo Paint has worked well so far. But in the future, it remains to be seen to what extent he maintains his brand memory.

Second, despite the small price wars, the industry is very competitive. The competition is fierce because there are brands in the industry. People trust and remember these brands.

The general trend is loyalty to these brands. It is very difficult to create a new brand here and keep people for a long time. It remains to be seen how Indigo Paints will perform here in the future. The third price.

Many people take a closer look at the P / E ratio and consider it an important parameter. (Price vs. Revenue) The company's previous figures show that the company's P / E ratio is above 100. It's more than industry.

Indigo Paints IPO History

Let's talk about the important dates of this IPO that you should be aware of if you want to bid.

Here are the details of the IPO for this company. The company's IPO is open from January 20, 2021, to January 22, 2021.

During this time you can bid on the company's initial public offering. The total size of the IPO is Rs 1,176 million.

The new capital (new amount raised through new shares) will be only Rs. The remaining Rs 300 crore is Rs 876 crore for sale for this offer. Its initial public offering price ranges from Rs 1,488 to Rs 1,490. To get the most out of it, you need to bid at least 10 shares.

Comment below: Should anyone subscribe to this initial public offering or not?

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