Indigo Paints hits lowest level since listing, slips 29% from all-time high

Shares of Indigo Paints hit their lowest level since listing at Rs 2,377.70, down 2.7 per cent on the BSE in intra-day trade on Wednesday. The stock was trading lower for the fourth straight day, having fallen 5.5 per cent during the period. With four days of decline, the stock of Indigo Paints has corrected 29 per cent from its high of Rs 3,348 touched on February 3, 2021.

On February 2, Indigo Paints had made a solid debut on the bourses as it listed at Rs 2,607.50, a 75 per cent premium over the issue price of Rs 1,490. Currently, the stock is trading 60 per cent above its issue price.

India Acorn ICAV, Nomura India Investment Fund, AL Mehwar Commercial Investments LLC and Abu Dhabi Investment Authority had bought more than four lakh equity shares of Indigo Paints at an average price of Rs 2,706 per share on debut day. Edelweiss Finance And Investments sold 3.50 lakh shares at Rs 2,613 per share, data shows.

Indigo Paints is the fifth-largest company in the Indian decorative paint industry in terms of revenue from operations for fiscal 2020 and the fastest growing amongst the top five paint companies in India. The company manufactures a complete range of decorative paints including emulsions, enamels, wood coatings, distempers, primers, putties and cement paints.

The Indian decorative paints market is expected to record a growth rate of approximately 13 per cent in value and 10.2 per cent in volume through 2024, driven by an increase in the disposable income of individuals and families, and various housing schemes, among others, HDFC Securities said in IPO note.

However, the continuing impact of the Covid-19 pandemic on business and operations is uncertain and it may be significant, the brokerage said.

"Covid impact could continue to have an adverse effect on the business, operations and future financial performance. Under-utilization of manufacturing capacities and an inability to effectively utilize expanded manufacturing capacities could have an adverse effect on the business, future prospects and future financial performance are the key concerns," it added.

Being a new player, the company is slowly and steadily entering new states and thereby gaining market share mainly from unorganised and small players and registering double the industry’s growth, said an analyst at Nirmal Bang in an IPO note. However, they added that other organized players are very strong and have deep pockets; hence, going forward, it might be difficult for Indigo Paints to maintain similarly high levels of growth and profitability once it reaches tier 1 and metro cities and competes directly with market leaders.