IRM Energy IPO books 50% in first two hours; retailers & NIIs lead bidders

The initial public offering (IPO) of IRM Energy saw a strong response from the investors during the first two hours of the bidding process on day one. The issue, which had opened for bidding on Wednesday, October 18, was overall half booked in the initial 120 minutes of bidding. Cadila Pharma-backed IRM Energy is offering its shares in the fixed price band of Rs 480-505 apiece with a lot size of 29 equity shares and its multiples thereof. The company is looking to raise Rs 545.40 crore via IPO route, which is entirely a fresh sale of 1.08 crore equity shares. According to the data, the investors made bids for 39,04,647 equity shares, or 51 per cent, compared to the 76,24,800 equity shares offered for the subscription by 12.15 pm on Wednesday, October 18. The three-day bidding for the issue will conclude on Friday, October 20. The allocation for retail investors was subscribed 78 per cent, while the portion reserved for non-institutional investors saw a subscription of 62 per cent. However, the quota set aside for qualified institutional bidders (QIBs) was yet to attract any bids as of the same time. Brokerage firms are mostly positive on the company, suggesting to subscribe to it. They are positive on the company's reasonable valuations compared to its peers, strong business prospects, expansion in different geographies and sound financials from the balance sheet. IRM Energy commenced its operations in 2015 and has delivered a strong performance throughout its journey. Company has delivered revenue growth at 88 per cent CAGR between FY20-23 with 63 per cent volume growth and other listed industry players have delivered volume growth of an average rate of 3-4 per cent in FY20-23, said Nirmal Bang Securities with a subscribe tag. "We are positive on the company's multifold growth compared to other players, as it is aiming to grow its volume by 3 times over the next four years on account of various opportunities available to drive the demand at its existing GAs. The issue is valued at 19.3 times PE based on its annualized Q1FY24 EPS which is reasonable compared to average PE Valuation of 18.6 times," it said. Ahead of its IPO, IRM Energy raised a total of Rs 160.35 crore from anchor investors by allocation of 31,75,200 equity shares at a price of Rs 505 per shares. BoB Capital Markets and HDFC Bank are the lead managers to the issue, while Link Intime India is the registrar for this IPO. Shares of the company will be listed on both BSE and NSE. The growth outlook in the new GA coupled with strengthening the balance sheet does offer us comfort in valuation. The company is developing requisite infrastructure in their GAs specially in Namakkal & Tiruchirappalli as these regions remain significantly underpenetrated.  The management has also guided that operating margins seems sustainable, said IndSec Securities. This is further supported by 19-20% CAGR in natural gas demand forecasted between FY22-30 owing to greater adoption of natural gas over fossil fuels in Industrial application. We also draw comfort on margins considering lower finance cost and future capex funded through internal accruals., it added with a 'subscribe' rating for the issue.Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.