The IPO of agrochemical company Heranba Industries opened today and at 11:20 am the issue was 0.25 times subscribed. The Gujarat-based company has set a price range of ₹626-627 per share. It is a manufacturer, exporter and marketing company of crop protection chemicals based in Vapi, Gujarat. The company has a strong 19.5% market share in the pyrethroids market and exports to more than 60 countries. Pyrethroids find use in important applications in pest protection, environmental health and crop care as well as animal health. The issue ends February 25.
Here are 10 things to know about Heranba’s IPO:
1) The allocation of shares in ₹Heranba’s IPO at 525 crore is expected to close on March 2 and listing could take place on March 5, according to brokers.
2) The lot size in Heranba IPO has been set at 23. Bigshare Services Pvt Ltd is the registrar of the IPO and will handle the share allocation and redemption.
3) 35% of the issue is reserved for the retail category.
4) Heranba is offering up to 99.8 lakh shares on the IPO, with 90.2 lakh shares being offered for sale and the remainder through a new share issue. After issuance, the participation of promoters will drop to 74.2%, against 98.8% earlier.
5) Funds ( ₹60 crore) raised through a new issue of shares will be used to finance the working capital needs of the business and the general needs of the business.
6) In fiscal year 20, the company recorded a turnover of ₹951 crore compared to ₹745 crores in FY18 as profits rose ₹97 crore from ₹50 crore.
7) “As of FY20, 49% of its revenue came from overseas markets, which allowed Heranba to weather the ups and downs locally. Covid-19 also had minimal impact on the operations of company since all agrochemicals were allowed to operate at full capacity. Heranba’s revenues increased at a CAGR of 13% between FY18-FY20 while its PAT increased at a CAGR of 44% during the same period respectively for the past three years, ”says Nirali Shah, Head of Equity Research, Samco Securities.
8) “The company has also reduced the debt on its books and is trading at a reasonable valuation multiple of 25x P / E against its peers. The company faces high risk due to soaring material prices In addition, it faces high competitive risk from peers such as Rallis India, Bharat Rasayan and Sumimoto Chemical. But despite these risks, Heranba continues to gain a dominant position with strong fundamentals and diversification capabilities. Therefore, we recommend investors to subscribe to However, investors should also be wary of dominant market sentiment and their own liquidity before aggressively subscribing to any IPOs ”, she added.
9) Another Religare broker said, “On the valuation front, the company is trading at a PE of 25x BPA FY20 which is a discount to its peers. We have a positive view of the company on the long term, given its strong product portfolio, large distribution network, valued customers and opportunity for healthy growth in the sector. Investors with a long-term view can subscribe to the issue. “
10) Emkay Global Financial Services Ltd and Batlivala and Karani Securities India are the lead managers responsible for the IPO.