India’s market for initial public offerings (IPO) is expected to gather pace in 2020. Boosted by this year's relatively small crop witnessing strong gains in the stock market, Pune-based Indigo Paints is planning an initial public offer (IPO) in 2020. The IPO likely to be launched in September-October 2020 will be an issue in the range of Rs 800-1000 crore. The company will use the fund to grow pan-India, scale up operations and expand its presence in the decorative paints segment.
According to the company, its proposed IPO would partially support capex spending of Rs 100 crore every year. It aims to achieve Rs 3,000 crore in revenue in the next five years. It reported a revenue of Rs 600 crore in 2019. The company is likely to close the current financial year with Rs 800-825 crore in revenue and with Rs 1,150 crore the next financial year.
The paint industry is dominated by players such as Asian Paints, Kansai Nerolac, Berger Paints, Akzo Nobel, etc, and Indigo Paints plans to become a key player in the industry. The company signed up with Mahendra Singh Dhoni as brand ambassador since last year for three years and that has helped in creating a pan-India brand equity. Indigo spends about 8-9% of its total revenues on advertising as against the industry average of 1-3%. Indigo's strategy has always been to build the brand from smaller towns of India - it believes small towns have a lot of money and can contribute to a big chunk of the firm's business. It is now entering bigger cites like Mumbai and Delhi.