Shares in Indigo Paints Ltd jumped 84 per cent in their market debut on Tuesday after a bumper response to the paint maker's $160 million initial public offering (IPO) last month, underscoring investor confidence in the sector as the economy recovers.

Indigo Paints opened at 2,607.5 rupees ($35.71), a 75 per cent premium to its issue price of 1,490 rupees, and rose to as much as 2,747 rupees, boosted by market euphoria following the federal budget on Monday, which included a proposal to extend a tax holiday for low-cost housing projects.

The paint industry is valued at about ₹545 billion and is expected to grow to ₹971 billion by 2024, according to the company's prospectus.

Conglomerate Grasim Industries Ltd announced its foray into the paint industry last month, with ₹50 billion of investment, citing robust outlook for the organised sector.

India has seen robust responses to consumer-focused IPOs and market debuts in recent months, as the stock market galloped to record highs on strong foreign inflows, boosted by coronavirus vaccine hopes and abundant liquidity in global markets.

Investors bid for 117 times the shares on offer in the Indigo Paints' IPO, where it issued new shares worth ₹3 billion and existing investors, including Sequoia Capital India Investments, sold stake worth ₹8.7 billion.

Pune-based Indigo Paints 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.

The company will use proceeds from the IPO, which ran from January 20-22, to fund the expansion of a manufacturing facility inthe southern state of Tamil Nadu, purchase equipment and repay debt.

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