Japan/Asia Long-Short, LightStream Research

Mio Kato

Japan/Asia Long-Short

Long-Short Analysis on Japan, Asia and the World

LightStream Research

LightStream conducts quantitatively rigorous and data-driven analysis with a focus on Japan and Asia.

We consistently cover the Tech, Consumer and Industrial sectors, and provide ECM and Events coverage more broadly.

We supplement traditional qualitative insights from company relationships with a robust quantitative foundation that examines as much historical data as is available.
We further refine the accuracy of our insights and calls through the use of alternative data to flesh out current trends, and through a valuation framework that emphasises non-superficial peer group selection and a proper attempt to understand the metrics and changes that have driven security valuations in the past.

Equity Capital Markets

Indigo Paints has been growing at a stellar pace within Indian market after expanding production capacity through the acquisition of facilities in Kerala and Tamil Nadu. The company also offers a relatively unique strategic take on the market, differentiating itself from the top four, Asian Paints, Berger Paints, Kansai Nerolac Paints and Akzo Nobel India. The question is how sustainable the growth in market share will be.

Indigo Paints has been growing at a stellar pace within Indian market after expanding production capacity through the acquisition of facilities in Kerala and Tamil Nadu. The company also offers a relatively unique strategic take on the market, differentiating itself from the top four, Asian Paints, Berger Paints, Kansai Nerolac Paints and Akzo Nobel India. The question is how sustainable the growth in market share will be.

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Indigo Paints (IP) aims to raise around US$165m in its India IPO. It is engaged in the business of manufacturing paints in India. It was the fifth largest company in the Indian decorative paint industry, in terms of revenue from operations in FY20 and was the fastest growing among the top five paint companies.Revenue from operations have grown at 41.9% CAGR over FY10-19 and 24.7% CAGR over FY18-20. Margins have been on an uptrend as well and hence, over FY18-20, gross profit grew at 36% CAGE, EBITDA at 87.8% and PATMI at 92.8%. The company has adopted a strategy of targeting smaller cities and rural areas to build its dealer network and then work its way up to the larger cities. It also claims to have introduced a host of differentiated products which have helped in brand building.IP aims to expand its distribution network further, and is focusing on installing tinting machines. However, it hasn’t been able to ramp-up the installation per year. In addition, some of the margin gains recorded over 6M21 might not be sustainable.

Indigo Paints (IP) aims to raise around US$165m in its India IPO. It is engaged in the business of manufacturing paints in India. It was the fifth largest company in the Indian decorative paint industry, in terms of revenue from operations in FY20 and was the fastest growing among the top five paint companies.Revenue from operations have grown at 41.9% CAGR over FY10-19 and 24.7% CAGR over FY18-20. Margins have been on an uptrend as well and hence, over FY18-20, gross profit grew at 36% CAGE, EBITDA at 87.8% and PATMI at 92.8%. The company has adopted a strategy of targeting smaller cities and rural areas to build its dealer network and then work its way up to the larger cities. It also claims to have introduced a host of differentiated products which have helped in brand building.IP aims to expand its distribution network further, and is focusing on installing tinting machines. However, it hasn’t been able to ramp-up the installation per year. In addition, some of the margin gains recorded over 6M21 might not be sustainable.

Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy

Event-Driven

Nippon Paint is up 51% YTD and 6.5% today alone. Kansai Paint is down 5.6% in that time and international peers such as Asian Paints, Kansai Nerolac, Berger Paints India, Akzo Nobel India, TOA Paint and PPG are all somewhere between up 9.5% and down 9.7% with only Sherwin Williams of the US cracking positive double digits at +16.7%. Arguably, the performance was driven by expectations of deal activity such as what was just announced but we find the details underwhelming relative to the share price performance.

Nippon Paint is up 51% YTD and 6.5% today alone. Kansai Paint is down 5.6% in that time and international peers such as Asian Paints, Kansai Nerolac, Berger Paints India, Akzo Nobel India, TOA Paint and PPG are all somewhere between up 9.5% and down 9.7% with only Sherwin Williams of the US cracking positive double digits at +16.7%. Arguably, the performance was driven by expectations of deal activity such as what was just announced but we find the details underwhelming relative to the share price performance.

Nippon Paint – Announced Deal Does Not Justify Share Price Run Up

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Quantitative Analysis

In Friday's Union Budget presentation, the Finance Minister proposed increasing the Minimum Public Shareholding (MPS) in listed companies from 25% to 35% and has asked the Securities and Exchange Board of India (SEBI) to consider raising the threshold. If and when implemented, promoters will need to either sell down their stake to meet the 35% threshold or buy back their stock and delist from the exchanges.In this piece, we look at multinational companies that have subsidiaries listed in India that do not meet the 35% threshold currently, and possible action on their part based on the current stock price, delisting guidelines and other considerations.

In Friday's Union Budget presentation, the Finance Minister proposed increasing the Minimum Public Shareholding (MPS) in listed companies from 25% to 35% and has asked the Securities and Exchange Board of India (SEBI) to consider raising the threshold. If and when implemented, promoters will need to either sell down their stake to meet the 35% threshold or buy back their stock and delist from the exchanges.In this piece, we look at multinational companies that have subsidiaries listed in India that do not meet the 35% threshold currently, and possible action on their part based on the current stock price, delisting guidelines and other considerations.

Asia focused research insights & advisory, Asia Advisors

Vinay Patel

Asia focused research insights & advisory

Asia Advisors

Asia Advisors is an independent financial advisory and research firm working closely with corporates and institutions to provide consulting solutions & research insights. We provide advisory services including capital solutions, business strategy and investment insights.
Firm is headed by Vinay Patel who has close to two decades of experience in research and business development at large, international investment banks such as HSBC and ICICI Securities. Led research efforts in areas of Macroeconomics, Asset Allocation & Investment Strategy for close to a decade in global & domestic research teams. As a business head in Singapore, advised top global investment management firms & Portfolio managers in Asia for India related investments.
Vinay was recently joined by Swapnil Manish, an investment banker and ex-ecommerce entrepreneur with more than 12 years of experience. Swapnil was the TMT banker at BNP Paribas and was part of several large M&A and ECM transactions (Bharti-Zain, Bharti Infratel IPO, Schneider-Zicom among several others). He's also had a stint as an ecommerce entrepreneur having launched & led Mumbai's first online grocery player.

Thematic (Sector/Industry)

In a surprise move, the Central bank (RBI) today maintained the policy rate at the current level of 6.25% but changed the monetary policy stance to neutral. The 6 member Monetary Policy Committee (MPC) was unanimous in its decision to hold rates. The consensus was again caught on the wrong foot as majority expected a rate cut. Key rationale behind the move has been the adoption of 4% inflation target for the next financial year (ending March 2018). Even as current CPI inflation at 3.4% is well…

In a surprise move, the Central bank (RBI) today maintained the policy rate at the current level of 6.25% but changed the monetary policy stance to neutral. The 6 member Monetary Policy Committee (MPC) was unanimous in its decision to hold rates. The consensus was again caught on the wrong foot as majority expected a rate cut. Key rationale behind the move has been the adoption of 4% inflation target for the next financial year (ending March 2018). Even as current CPI inflation at 3.4% is well…

RBI Spoils the Bond Market Party - Prices Unlikely to Scale the Peaks Seen After Demonetization

India

Akzo Nobel India Ltd. manufactures specialty chemicals, paints and starches.  The Company's products include surfactants, methyl ethyl ketone peroxides, epoxy intumescent passive fire protection coating, chelating agents, powder polymers, rust preventive, salt and adhesives; and decorative paints, automotive finishes, and marine coatings.

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Akzo Nobel India (AKZO IN)

Indigo Paints IPO – Tinting on Up

Indigo Paints offers a very interesting growth profile combined with some tantalising potential for margin expansion. The question is, does this...

Mio Kato

Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy

Indigo Paints aims to raise around US$165m in its India IPO. Revenue grew at 41.9% CAGR over FY10-19. Over FY18-20, Revenue grew at 24.7% CAGR,...

Sumeet Singh

India - Stake Sale or Delisting?

In Friday's Union Budget presentation, the Finance Minister proposed increasing the Minimum Public Shareholding (MPS) in listed companies from 25%...

Brian Freitas

RBI Spoils the Bond Market Party - Prices Unlikely to Scale the Peaks Seen After Demonetization

In a surprise move, the Central bank (RBI) today maintained the policy rate at the current level of 6.25% but changed the monetary policy stance to...

Asia Advisors

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Indigo Paints IPO – Tinting on Up

Indigo Paints offers a very interesting growth profile combined with some tantalising potential for margin expansion. The question is, does this...

Mio Kato

Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy

Indigo Paints aims to raise around US$165m in its India IPO. Revenue grew at 41.9% CAGR over FY10-19. Over FY18-20, Revenue grew at 24.7% CAGR,...

Sumeet Singh

Nippon Paint – Announced Deal Does Not Justify Share Price Run Up

Nippon Paint is up 51% YTD and 6.5% today alone. Kansai Paint is down 5.6% in that time and international peers such as Asian Paints, Kansai...

Mio Kato

India - Stake Sale or Delisting?

In Friday's Union Budget presentation, the Finance Minister proposed increasing the Minimum Public Shareholding (MPS) in listed companies from 25%...

Brian Freitas

RBI Spoils the Bond Market Party - Prices Unlikely to Scale the Peaks Seen After Demonetization

In a surprise move, the Central bank (RBI) today maintained the policy rate at the current level of 6.25% but changed the monetary policy stance to...

Asia Advisors