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.

Equity Capital Markets

Indigo Paints (IP) aims to raise around US$160m 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.I've covered the background and company performance in my previous insight, <a href="https://www.smartkarma.com/insights/indigo-paints-ipo-growing-fast-but-future-growth-won-t-come-as-easy" target="_blank" rel="noopener">Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy</a>.In this insight, I'll talk about earnings forecast and valuations.

Indigo Paints (IP) aims to raise around US$160m 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.I've covered the background and company performance in my previous insight, Indigo Paints IPO - Growing Fast but Future Growth Won’t Come as Easy.In this insight, I'll talk about earnings forecast and valuations.

Indigo Paints IPO - Not Leaving a Whole Lot on the Table

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

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.

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

Consumer Analyst / Channel Surveillance Specialist, Trudence Capital Advisors

Pranav Bhavsar

Consumer Analyst / Channel Surveillance Specialist

ASA Capital Management

ASA Capital Management is a boutique Research and Investment Advisory firm focusing on primary research in India. ASA provides bespoke research services to Institutional Clients with a focus on due diligence backed with primary research, Field Trips & Channel Checks.

Equity Bottom-Up

The Indian Materials space especially paints is expected to see multiple headwinds over the next two years.  In this Insight, we provide our rationale on a possible trade setup for a Short <a href="https://www.smartkarma.com/entities/berger-paints-india-ltd" target="_blank" data-smartkarma-citation="entities:5431:1" rel="noopener">Berger Paints India (BRGR IN)</a> and Long <a href="https://www.smartkarma.com/entities/pidilite-industries-ltd" target="_blank" data-smartkarma-citation="entities:20573:1" rel="noopener">Pidilite Industries (PIDI IN)</a>. 
Over the last 1 Year, BRGR has outperformed PIDI by ~41%. On an absolute basis, BRGR posted a 54.65% return and PIDI posting a 13.69% return. We now expect PIDI to catch up and outperform BRGR. 
BRGR and PIDI are highly correlated in spite of having different products, due to similar dynamics of the sector they operate in.

The Indian Materials space especially paints is expected to see multiple headwinds over the next two years.  In this Insight, we provide our rationale on a possible trade setup for a Short Berger Paints India (BRGR IN) and Long Pidilite Industries (PIDI IN). 
Over the last 1 Year, BRGR has outperformed PIDI by ~41%. On an absolute basis, BRGR posted a 54.65% return and PIDI posting a 13.69% return. We now expect PIDI to catch up and outperform BRGR. 
BRGR and PIDI are highly correlated in spite of having different products, due to similar dynamics of the sector they operate in.

Berger Vs Pidilite - A Long/Short Opportunity

We present our takeaways from attending Kansai Nerolac's virtual AGM. Weak revenue growth, lower margins and lower return ratios are here to stay for KNPL. We expect multiple headwinds for companies in this sector, that will definitely offset the gains from lower raw material prices which KNPL had decided to pass on to its consumers. All in all, we believe that <a href="https://www.smartkarma.com/entities/kansai-paint-co-ltd" target="_blank" data-smartkarma-citation="entities:13340:1" rel="noopener">Kansai Paint (4613 JP)</a> shareholders must prepare themselves for a muted FY21 from their Indian Subsidiary <a href="https://www.smartkarma.com/entities/kansai-nerolac-paints-ltd" target="_blank" data-smartkarma-citation="entities:10169:1" rel="noopener">Kansai Nerolac Paints (KNPL IN)</a> .

We present our takeaways from attending Kansai Nerolac's virtual AGM. Weak revenue growth, lower margins and lower return ratios are here to stay for KNPL. We expect multiple headwinds for companies in this sector, that will definitely offset the gains from lower raw material prices which KNPL had decided to pass on to its consumers. All in all, we believe that Kansai Paint (4613 JP) shareholders must prepare themselves for a muted FY21 from their Indian Subsidiary Kansai Nerolac Paints (KNPL IN) .

AGM Diaries | Kansai Nerolac - Be Prepared for a Muted FY21

India

Asian Paints Limited manufactures a wide range of decorative paints, varnishes, enamels, and black & synthetic resins. The Company, through its subsidiaries, also manufactures specialty industrial chemicals and vinyl pyridine latex products which are used in the manufacture of rubber tires.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Asian Paints (APNT IN)

Indigo Paints IPO - Not Leaving a Whole Lot on the Table

Indigo Paints (IP) aims to raise around US$160m in its India IPO. It was the fifth largest company in the Indian decorative paint industry and was...

Sumeet Singh

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

Berger Vs Pidilite - A Long/Short Opportunity

The Indian Materials space especially paints is expected to see multiple headwinds over the next two years. In this Insight, we provide our...

Pranav Bhavsar

AGM Diaries | Kansai Nerolac - Be Prepared for a Muted FY21

We present our takeaways from attending Kansai Nerolac's virtual AGM. Weak revenue growth, lower margins and lower return ratios are here to stay...

Pranav Bhavsar

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)

Indigo Paints IPO - Not Leaving a Whole Lot on the Table

Indigo Paints (IP) aims to raise around US$160m in its India IPO. It was the fifth largest company in the Indian decorative paint industry and was...

Sumeet Singh

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

Berger Vs Pidilite - A Long/Short Opportunity

The Indian Materials space especially paints is expected to see multiple headwinds over the next two years. In this Insight, we provide our...

Pranav Bhavsar

AGM Diaries | Kansai Nerolac - Be Prepared for a Muted FY21

We present our takeaways from attending Kansai Nerolac's virtual AGM. Weak revenue growth, lower margins and lower return ratios are here to stay...

Pranav Bhavsar