Summary of the business of our Company [From DRHP]
We are engaged in the business of manufacturing paints and are the fastest growing amongst the top five paint companies in India. We are the fifth largest company in the Indian decorative paint industry in terms of our revenue from operations for Fiscal 2020 (Source: F&S Report).
We have achieved this position in a highly competitive Indian decorative paint industry on the back of our multi-pronged approach. This includes introducing differentiated products to create a distinct market in the paint industry, building brand equity for our primary consumer brand, creating an extensive distribution network, and installing tinting machines across our dealer network.
Summary of the business of the industry in which our Company operates (Source: F&S Report)
The decorative paints segment represents around 74% of the overall paint market in India and includes wall finishes for interior and exterior use, enamels, wood finishes and ancillary products such as primers and putties. The decorative segment has grown at a CAGR of 11.5% from Fiscal 2014 to Fiscal 2019, driven by the increase in consumption of paints in Tier 2 – 4 Cities, that account for nearly half the total sales. The Indian decorative paints market is expected to grow at a CAGR of approximately 13% in terms of value and 10.2% in terms of volume through 2024.
There is no doubt that after the March 2020 lows, the market has given a great valuation to paints industry, Top 2 or 4 hold the major market. Considering the market share and the financials I like that Indigo Paints is very aggressively priced. Those who apply and get an allotment and those who are there for quick returns should exit if there are positive returns. Otherwise further analysis can be done only after the stock gets listed on the bourses. Because at such high-level pricing it may not sustain for a long time. I also give consideration to the average cost of acquisition for selling shareholders in an IPO which is around Rs.100 to Rs.141 so they are getting 10x returns, so newbies should think over the financials.
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