Investor Rush for IRM Energy IPO, Issue sees Full Subscription on Day 1
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The Initial Public Offering of IRM Energy Limited was subscribed 1.71 times on the first day of bidding led by Non-Institutional Investors and Retail.
The issue received bids of 1,30,56,583 shares against the offered 76,24,800 equity shares, at a price band of ?480-505, according to the data available on the stock exchanges.
Non-Institutional Investors Portion was the most subscribed with 2.60 times, followed by Retail Portion with 1.77 times, whereas Qualified Institutional Buyer Portion subscribed 1.07 times. Employee Portion was subscribed 0.37 times. The issue kicked off for subscription on Wednesday, October 18, 2023 and will close on Friday, October 20, 2023.
Leading brokerages like SBI Securities, Nirmal Bang, Anand Rathi, BP Wealth, Hensex Securities, Indsec Securities, Marwari Financial Services, Reliance Securities, and Swastika Investment have given a “SUBSCRIBE” rating to the issue, citing IRM Energy Ltd., a prominent player in the distribution of Compressed Natural Gas (CNG) and Piped Natural Gas (PNG), has received favourable assessments from brokerages. The company's successful track record, diverse customer portfolio, strategic acquisitions, and emphasis on technology adoption have been noted as strengths, contributing to its growth potential. Additionally, its stable financial performance, environmentally friendly fuel alternatives, and reasonable valuation relative to the industry prompted recommendations to subscribe to the IPO for potential long-term gains.
Brokerages recognize IRM Energy's position in a growing market, with a surge expected in natural gas demand, particularly in the CGD sector. The company's steady volume growth and sound operational strategies stand out, making it an attractive investment.
HDFC Bank Limited, and BOB Capital Markets Limited are book running lead manager and Link Intime India Private Limited is the registrar to the offer. The equity shares are proposed to be listed on BSE and NSE.
Company Information
IRM Energy Limited (IRMEL) in order to capitalize on synergetic its business opportunities, has entered into a strategic and technical partnership with Shizuoka Gas Co. Ltd, Japan (“ShizGas”) fourth largest gas company in Japan by natural gas sales volume, by infusing capital through a private placement in IRMEL. On the other hand, in order to achieve business integration, it invested in Farm Gas Private Limited, Venuka Polymers Private Limited Ni Hon Cylinders Private Limited. Additionally, it has signed a memorandum of understanding (“MoU”) with Mindra EV Private Limited for setting up an electric vehicle (“EV”) charging infrastructure at DODO Stations and COCO Stations for a period of five years, with a vision of transitioning of becoming an energy-oriented company.
The company’s revenue from operations increased by 6.51% from Rs 230.27 crore for the three months ended June 30, 2022 to Rs 245.25 crore for the three months ended June 30, 2023, primarily due to an increase in the sale of compressed natural gas, piped natural gas and increase in connection income and other operating revenue. Whereas, profit after tax increased by 31.01% from Rs 20.54 crore in the three months ended June 30, 2022 to Rs 26.91 crore in the three months ended June 30, 2023 due to increase in total revenue.
Revenue for fiscal 2023 grew 90.27% to Rs 1039.13 crore from Rs 546.14 crore for the Financial Year 2022 and profit after tax fell 50.68% to Rs 63.15 crore for the FY 2023 against Rs 128.03 crore in FY22, due to significant increase in input gas cost as well as due to lower profits earned by joint control entities.
The company has operations at Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath (Union Territory of Daman and Diu/Gujarat), and Namakkal & Tiruchirappalli (Tamil Nadu), serving 184 industrial customers, 269 commercial customers, 52,454 domestic customers, as at June 30, 2023.
The table below shows subscription data for all the categories of investors:
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