Shares of Indigo Paints hit a record low of Rs 1,343, plunging 10 per cent on the BSE in Wednesday’s intra-day trade, after nearly 4 per cent of the total equity of the paint company changed hands via block deal.
At 09:15 am, around 1.8 million shares, representing 3.97 per cent of the total equity of Indigo Paints, changed hands on the BSE, the exchange data shows. On the NSE, a total 1.05 million shares or 2.2 per cent of the equity of the company had changed hands till 10:11 am. The names of the buyers and sellers, however, could not be ascertained immediately.
According to reports, Sequoia Capital India Investments was to sell up to 3.3 per cent stake in Indigo Paints via block deals on Wednesday. The deal was expected at 12 per cent discount to close price on Monday. Base price of deal was reportedly fixed at Rs 1,314 per share for a total offer of 1.56 million shares.
As on September 30, 2022, Sequoia Capital India Investments IV held 13.73 per cent holding, while, SCI Investments V held 14.81 per cent stake in Indigo Paints, the shareholding pattern data shows.
Meanwhile, the stock of Indigo Paints has fallen below its previous low of Rs 1,375, touched on July 1, 2022. The company had made its stock market debut on February 2, 2021. The market price of Indigo Paints has also tanked 60 per cent from its record high level of Rs 3,348, touched on February 3, 2021. The company had issued shares at price of Rs 1,490 in initial public offer (IPO).
The company manufactures a complete range of decorative paints including emulsions, enamels, wood coatings, distempers, primers, putties and cement paints.
Analysts at Motilal Oswal Financial Services have a ‘buy’ rating on Indigo Paints and a target price of Rs 1,720 per share. “As a result of the September quarter (Q2) miss, the changes to our model have led to a 16 per cent reduction in our FY23 EPS estimate,” the brokerage firm said in result update.
However, good sales momentum at a time when its peers are slowing down and a sharp likely improvement in incremental margin meant that our FY24 EPS forecast has not seen any major cut.
Indigo Paints has successfully surmounted the high entry barriers of the Indian Paints industry, through its patient and multi-pronged strategy, comprising introducing of differentiated products, purposefully building a distribution network via rural markets, creating brand equity through high investments in advertising, rapidly driving the penetration of tinting machines, and engaging with influencers (painters/contractors) to build trust, the brokerage firm said.