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New Delhi: The initial public offering of Indigo Paints, the fifth-largest decorative paints company in India, was subscribed 1.42 times as of 3:20 pm. on January 20, according to data available on the bourses. The IPO will close on January 22.

The public issue has received bids for 88.54 lakh equity shares against an offer size of 55.18 lakh shares (excluding anchor book). The IPO got off to a good start on Wednesday with the issue receiving 8 per cent bids within just the first 15 minutes By 10:15 am, the issue received bids for 4,17,240 shares, representing 8 per cent of the issue size of 55,18,402 shares.

The issue witnessed good response from investors, including global investors and domestic asset management companies. The company aims to raise Rs 1,170 crore through its public issue, of which it has already garnered Rs 348 crore from anchor investors.

The company raised Rs 348 crore, allotting 25.3 lakh shares at Rs 1,490/share to marquee names like Capital Group, Government of Singapore Investment Corporation, Fidelity, Goldman Sachs, SBI MF, HDFC MF, ICICI Prudential MF to name a few. Analysts have noted the price of Rs 1,490/share as commanding a hefty valuation of 125x the FY21 P/E, much higher than the average paint company valuations which stand at 95x.

Indigo Paints is a pure-play decorative paint company that has managed to grow at a CAGR of 42% in the last decade vs 13% which the market leader, Asian Paints grew at. The company also has a very high A&P expense which puts a cap on its margins, despite its decorative portfolio. 

It is worth noting that the company wants to use the proceeds of the fresh issue for expansion of the existing manufacturing facility at Pudukkottai, Tamil Nadu by setting up an additional unit adjacent to the existing facility and to purchase tinting machines and gyroshakers.

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