IRM Energy IPO opens, GMP rises over 13%; should you subscribe to the issue-

IRM Energy IPO opens, GMP rises over 13%; should you subscribe to the issue?

IRM Energy IPO: IRM Energy IPO opened for public subscription today and will close on Friday, October 20, 2023. The price band for its public issue at Rs 480-505 per equity share of face value Rs 10 each. At the upper end of the price band, the company’s promoters and shareholders seek to raise Rs 545.40 crore from the IPO. Ahead of the public issue, IRM Energy shares’ GMP rose to 13.27%. The bidding for anchor investors concluded on Tuesday, wherein the company collected Rs 160.35 crore.

The IPO comprises a fresh issue of 10,800,000 shares, aggregating up to Rs 545.40 crore. For potential investors, the bidding starts at a minimum of 29 equity shares, with subsequent bids in multiple lots of 29 equity shares each. The minimum amount of investment required by retail investors is Rs 14,645. The company intends to use the net proceeds from the IPO for the funding capital expenditure requirements for the development of the City Gas Distribution network in the Geographical Areas of Namakkal and Tiruchirappalli (Tamil Nadu) in Fiscal 2024, Fiscal 2025 and Fiscal 2026, prepayment or repayment of all or a portion of certain outstanding borrowings availed by the Company and general corporate purposes.

Should you apply for the IRM Energy IPO?Mehta Equities: Subscribe

“IRM Energy IPO offers investors an opportunity to invest in a growing and emerging player in the city gas distribution segment., backed by Cadila Pharmaceuticals. Exclusive CNG and PNG rights, expansion plans, and a diverse customer base drive operational efficiency. IRMEL’s vertical integration into renewables and strategic investments show foresight. Strong FY22 and FY23 revenue growth at 157%/90% is promising. At Rs 505 per share, the IPO values IRMEL at Rs 2072 Cr with a P/E of 19.26x, similar to peers. With industries shifting to natural gas, IRMEL’s market presence and strategy make it poised for success. We recommend ‘Subscribe” for long-term investors.”

Anand Rathi: Subscribe – Long Term

“At the upper price band company is valued at P/E of 33x with a market cap of ₹20,735 million post issue of equity shares and return on net worth of 18.2%. Compared with competitive fuels, they provide a more reliable and environmentally friendly alternative fuel to all their customer segments, and hence have been able to tap potential customer segments in the respective Gas. On the valuation front, we believe that the company is fairly priced. Thus, we recommend an ‘Subscribe – Long Term’ rating to the IPO.”

Stoxbox: Subscribe

“IRM Energy also benefits from its strong parentage of Cadila Pharmaceuticals 49.5% stake) which has aided the business in overcoming certain entry barriers such as the requirement of large investments in this sector. Coming to the financial performance, the business has recorded a healthy volume CAGR growth of 76.58% to 196 MMSCM in FY23 compared to 63 MMSCM in FY21 while its ROE and ROCE ratios stood at 18.2% and 14.2% in FY23, respectively. On the upper price band, the issue is valued at a P/E of 24.1x based on FY2023 earnings, which is fairly valued compared to the average industry P/E of 43.9x. We, therefore, recommend a ‘Subscribe’ rating for the issue.

(The recommendations in this story are by the respective research analysts and brokerage firms. FinancialExpress.com does not bear any responsibility for their investment advice. Capital markets investments are subject to rules and regulations. Please consult your investment advisor before investing.)