Even even though Dalal Street witnessed a rout in the final six trading session with Nifty 50 index coming down 7% from its highs, the quickly to debut Indigo Paints is nonetheless going robust in the unlisted space. The decorative paints manufacturer will list on the bourses in the coming week just a day right after Nirmala Sitharman opens her bahi-khata and reveals what her Union Budget for 2021-22 will be. Indigo Paints is so far the most subscribed initial public supplying (IPO) of 2021 right after it garnered bids 117 occasions the concern.
“Currently, Indigo Paints is trading at a premium of Rs 750-800 per share in the grey market,” Narottam Dharawat, founder, Dharawat Securities told TheSpuzz Online. He added that there has only been a marginal downward movement in Indigo Paints in spite of the bearish sentiment on Dalal Street. “Overall, the listing of Indigo Paints should be good. The company profile is good and it has good growth potential. Such stocks with high growth visibility usually go good,” he added when not ruling out some dangers as the stock lists a day right after the Union Budget.
Indigo Paints is the fifth biggest decorative paints manufacturer in India. Indigo Paints has grown at a 42% CAGR more than the monetary year 2010 to 2019 against a 12-13% CAGR recorded by best 4 players. The decorative Paints sector is a Rs 40,300 crore sector, according to brokerage and study firm Motilal Oswal. The brokerage firm added that the sector is anticipated to develop at CAGR 13% amongst the Financial year 2019 and 2024. When compared to peers such as Asian Paints, Berger Paints, Nerolac, and Akzo, Indigo Paints displayed highest income CAGR more than the fiscal years 2018-2020.
Key dangers aligned with the business mainly stem from the extremely competitive sector that it operates in. Indigo Paints’ 46% income came from southern states which shows its higher dependency on the area. Another threat that is related with the stock is its association with crude oil. Fluctuations in Crude Oil could effect the firm.
“The issue is valued at 11.3x FY20 Mcap/sales which is comparable to peers (APNT 12.3x; BRGR 11.8x). Hence we recommend Subscribe to the IPO from Long Term perspective,” analysts at Motilal Oswal mentioned. Further Indigo Paints’ differentiated item portfolio and robust expansion plans are appealing from an investor point of view.