Siddhika Coatings IPO Review – Subscribe

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Introduction of Siddhika Coatings IPO

Siddhika Coatings Ltd. proposes a public issue of 824,000 equity shares having a face value of Rs. 10 each.

The issue will open on 24th March 2021 and close on 26th March 2021.

The pre-issue shareholding by promoters is 18,95,150 shares and represents 83.64% holding of the total authorized share capital of the company. The post-issue total paid-up capital will be 30,89,500.

The post-issue promoter shareholding will be 61.34%

The company is a strategic partner of SK Kaken Ltd. SKK is a coatings and pigments manufacturer based in Japan.

The association between Siddhika and SKK is long and dates back over 15 years. The company is a strategic part of an important value chain- India’s paint sector.

Industrial and decorative paints are the two broad areas within the sector.

The sector has grown at a steady rate and has generated good shareholder value in the last decade. The underlying product- paints & pigments have a characteristic of being a regularly needed product in both domestic as well as industrial sectors.

The steady nature of the demand for the product ensures strong investor sentiment for companies operating throughout the value chain.

Siddhika Coatings IPO

Alongwith supplying products of SKK, Siddhika also provides services by coating interior as well as exterior surfaces of civil structures.

Important products & Services

High Build Designer Stone Textures

Stone finish textures are used to give a stone-like effect to a piece of architecture.

The premium look-and-feel is made possible by technically sophisticated products. SKK’s expertise in manufacturing these products allows the client to choose the desired colours.

The look of a natural stone can be achieved without the use of any artificial pigments. The hassles of using heavy stone slabs is avoided, but at the same time aesthetics is not left behind.

The superiority of a product is proven by its high usability, and SKK and Siddhika are at the forefront to provide a superior consumer experience.

Elastomeric textures

By its very definition, ‘elastomers’ are substances that are able to regain their shape when an external force is removed. Early cracking in architectural works is a turn-off for the spectator.

Contrary to the popular opinion, these instances of cracking can be avoided by using elastomeric paints. This is a dominant product in developed economies.

The usability of this product is high in areas with high-temperature variance like North India. In India, the usage of elastomeric structures is bound to grow as quality consciousness and premiumization rises.

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Thermal insulation coatings and paints

‘Climate change’ is the buzzword and enterprises are looking for newer ways to reduce the carbon footprint. One easy way of doing it is by using thermal insulation coatings.

These coatings ensure that heat exchange slows down between the exterior and interior of a building. Naturally, the requirement for air conditioning goes down.

Not just the carbon footprint, but companies can expect a direct reduction in power usage. The goodness of lower carbon footprint and reduced burden on expenses is reason enough for more construction companies to offer superior products to their clients.

The Paints Industry

The paint industry in India is more than 100 years old. The journey of product evolution has been inline with the rising per capita income for the country.

Traditional white-wash got slowly transitioned into quality paints like emulsions and enamels. This journey of product evolution further continues with more value added products being offered by the industry. The total estimated size of the paints industry is approximately Rs. 70,000 crores. This rising quality consciousness propelled paint manufacturers to offer better value propositions like odor-free and dust free paints.

The evolution of consumer preferences is still an undergoing phenomenon. At a broader level, the paints market is divided into decorative paints and industrial paints.

A major chunk (75%) comprises decorative paints. The industrial paints and decorative paints segments are expected to grow at 9.5% and 12.7% respectively.

What makes Siddhika Coatings IPO a unique?

Siddhika Coatings identified the opportunity of exterior coatings early-on. The coatings business is still at a nascent stage in India.

The visionary promoters successfully associated with SKK and meaningfully started developing the market for these world-class products. Within a span of one decade, Siddhika has successfully transitioned from a painting contractor to a ‘Total Maintenance System’ (TMS) provider.

TMS is a growing concept in India, with awareness for the same increasing with the rising expectations for quality. As the construction industry picks up, the expectation for an integrated solutions provider only increases. Siddhika well fits the equation.

Siddhika is a strategic partner for SKK, and the Japanese giant has given the required support to the Indian partner. Siddhika gets complete support on marketing and subject matter knowledge. India is a growth market and a player like Siddhika opens up the gateway to the world’s largest market.

The Sidddhika Journey

In a relatively short span of 10 years, team Siddhika has achieved many milestones. Their presence in all the key geographical zones puts them in an advantageous position to capitalize from the impending development of the country.

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The expansionist mindset puts them on a front foot to capitalize on the fast-moving opportunities.

Siddhika Coatings Journey

Team Composition

The team is a good blend of experience and aspirations. Academic qualifications and on-field experience put the team in an advantageous position to maintain cordial relations with their Japanese partner, and at the same time address the on-ground requirements of diverse customers.

Mr. Abhijeet Banerjee is the Chairman and Executive Director and he brings to the table a rich experience of 31 years in the architectural paints segment.

Mr. Charitra Maheshwari is the Managing Director and he has more than 26 years’ experience in various business functions like logistics, sales, marketing.

Mr. Gaurav Agarwal, aged 40 Years is Executive Director of our Company and has been associated with our Company since 2014. He is also responsible to establish teams & networks in challenging terrains for the expansion of the company overall.

Mr. Manvendra Pratap Singh, aged 36 is Executive Director of our Company and has more than 14 years of experience. He looks after the West Bengal region and the company’s new Turnkey business in Mumbai.  

Siddhika Coatings Team

The board of directors has the required diversity in terms of experience profiles. Out of the 8 directors, 4 are independent directors and this adds weight to the good corporate governance practices.


  • Paints is a fast moving product in both domestic and industrial sectors. Within the industrial sector, the company’s products have a relatively stable demand cycle. This predictable demand for paints makes case for good planned growth opportunities.
  • Industrial development in India is an area of focus for the incumbent government. Various schemes like Atmanirbhar Bharat are seemingly hitting the right chords. Paint companies stand to benefit in a big way from these growth opportunities.
  • Newer growth opportunities are likely to open up in the automobile sector, which is a major consumer of paints and related products. The buzz around electric vehicles is likely to zoom automobile sales over the next decade.

Proceeds of the issue

The issue consists of fresh equity shares being offered by the company. The primary objective of the issue is to fulfill working capital needs of the company.

In its growth phase, the company expects growing working capital needs. Receivable days for the company have increased from 63.87 in 2018-19 to 66.18 in 2019-20.

Similarly, payable days have reduced from 12.38 in 2018-19 to 5.35 in 2019-20. Inventory position in terms of inventory days is more or less the same.

On a consolidated basis, the company foresees the higher deployment of working capital to continue on the growth trajectory.

Historical financials

Topline: Revenues have grown at a CAGR of 11% from Rs. 219.76 crores in FY’18 to Rs. 301.25 crores in FY’20.

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EBITDA margin: The company recorded an EBITDA margin of 16.67%, 15.68%, 9.82% in FY’ 18, FY’19 and FY’20 respectively

Profit after tax margin: The company recorded PAT margin of 11.67%, 10.99% and 9.82% in FY’18, FY’19 and FY’20 respectively

Return on Equity: The company has delivered an impressive Return on Equity of 17.67%, 20.67% and 17.22% in FY’18, FY’19 and FY’20 respectively.

Siddhika Coatings Financials


At the proposed price point of Rs. 57 per share, Siddhika Coatings IPO is valued post-issue at Rs. 17.61 crores.

This microcap has the potential to gain significant market share in India’s paint industry which is a massive Rs. 70,000 crores.

At the latest full year EBITDA of Rs. 425.69 lacs, the Enterprise Value to EBITDA ratio comes approximately to 4. On the price to earnings multiple, the company is valued at FY’25 forward multiple of 31 (Assuming the industry standard growth rate in earnings).

Final Thoughts on Siddhika Coatings IPO

Siddhika Coatings has exceeded expectations by identifying at an early stage the opportunity in value added coatings business. The expertise of SKK and the aspirations of Siddhika’s leadership team is a combination that can create ample shareholder value.

This combination is topped by an expanding Indian market. The Indian construction industry is on a growth trajectory and a product portfolio like the one by Siddhika offers a great way of participating in the India growth story.

The value added concept of ‘Total Maintenance System’ is highly likely to invite strong interest over the next many years. Every business today is looking at means to differentiate its offerings.

For a construction company, the proposition of TMS should be enticing enough to consider value-based pricing.

Providing quality at value added pricing is yet a developing phenomenon in India. However, following the footsteps of consumer evolution, the Indian consumer is getting more value conscious.

The journey from ‘cost conscious’ to ‘value conscious’ consumers creates huge opportunities for players like Siddhika.

The team has a proven track record of profitably scaling up operations across various geographies. This scalable model will derive the much-needed impetus by way of this initial public offering.

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