After a stellar response to Indigo Paints Ltd’s initial public offering (IPO) last month, shares, on Tuesday, jumped 84 per cent in their market debut.
Indigo Paints opened at Rs 2,607.5, a 75 per cent premium to its issue price of Rs 1,490, and rose to as much as Rs 2,747, boosted by market euphoria following the Union budget on Monday, which included a proposal to extend a tax holiday for low-cost housing projects.
The paint industry is valued at about Rs 545 billion and is expected to grow to Rs 971 billion by 2024, according to the company’s prospectus.
In Indigo Paints’ IPO, investors bid for 117 times the shares on offer, where it issued new shares worth Rs 3 billion and existing investors, including Sequoia Capital India Investments, sold a stake worth Rs 8.7 billion. Grasim Industries Ltd announced its push into the paint industry last month, with Rs 50 billion of investment.
The company will use proceeds from the IPO, to fund the expansion of a manufacturing facility in Tamil Nadu, purchase equipment and repay debt.
Pune-based paint-maker clocked a 78 per cent jump in profit for the year ended March 31, on revenue growth of 16.6 per cent, according to its prospectus.
