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Pune-based Indigo Paints is looking to raise ₹500-800 crore through an IPO next year. The public issue that may be launched in September-October 2020 is likely to give a partial exit option to Sequoia Capital, the PE fund, which has around 38 per cent stake in the company.
According to Hemant Jalan, Founder and Managing Director, Indigo Paints, the company would require the funds as it looks to grow pan-India. The IPO would also help the company scale up further and be amongst the major players in the paint industry of the country.In the meantime, it will look to expand presence in the decorative paints segment.
“A partial exit by Sequoia would also help push up the size of the IPO. We can raise ₹500-800 crore with funds being used for expansion and also for the exit of PEs. As of now, we are planning the IPO next fiscal, around September or October of 2020,” he told BusinessLine .
Sequoia invested ₹55 crore in Indigo Paints in 2014 and later put in another ₹95-odd crore in 2016 as the company looked to acquire Kerala-based Hi Build Coatings.
Indigo Paints reported a turnover of ₹600 crore in FY19 with an EBITDA of 9 per cent. It is targeting an over 40 per cent annual growth in FY20 and a turnover of ₹850-875 crore, with EBITDA margins improving to 13 per cent from 12.5 per cent. “Our average CAGR has been between 45 and 49 per cent,” Jalan said.
According to him, with operations expanding to pan-India, the company would look to improve its margins. Over the next two years, margins should be close to the industry average of 14.5-15 per cent with improvement in brand equity and better scale of operations. In order to improve brand equity, the company also roped in MS Dhoni as brand ambassador.
The company would look to invest ₹55 crore as capex across its existing facilities as it looks to ramp up production.
Indigo has three manufacturing facilities in the country. Two of these are located in South India — one each at Tiruchirappalli and Kochi. The third is located at Jodhpur.
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