IRM Energy IPO subscribed 3x on Day 2 so far; NIIs quota booked over 5 times

The initial public offering (IPO) of IRM Energy continued to witness a strong response from the investors during the second day of the bidding process from all categories of investors. The issue, kicked-off for bidding on Wednesday, was overall booked 1.74 times on the first day. IRM Energy is selling its shares in the price band of Rs 480-505 apiece with a lot size of 29 equity shares and its multiples thereafter. The Cadila Pharma-backed city gas distribution player 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 2,26,88,295 equity shares, or 2.98 times, compared to the 76,24,800 equity shares offered for the subscription by 1.40 pm on Thursday, October 19. The three-day bidding, which kicked off on Wednesday, October 18, will conclude on Friday, October 20. The portion reserved for retail investors was subscribed 3.25 times, while the allocation for non-institutional investors (NIIs) saw a subscription of 5.17 times. The quota set aside for qualified institutional bidders (QIBs) was subscribed 1.08 times as of the same time. However, the allocation for employees was booked 74 per cent. Majority of the brokerage firms tracking the IPO are positive on the issue and have a subscribe rating to it, citing its reasonable valuations, strong business prospects, expansion plans and sound financials. Shares of the company will be listed on both BSE and NSE. IRM Energy is valued at FY23 PE multiple of 32.8 times and EV/EBITDA of 20.3 times, at the upper price band on post-issue capital, said SBICap Securities.  "Demand for natural gas in the CGD sector is expected to grow at a CAGR of 19-20 per cent over FY23-FY27P which seems very supportive for the company’s growth outlook," it added with a 'subscribe' rating for long term. Ahead of its IPO, IRM Energy raised a total of Rs 160.35 crore from 12 anchor investors by allocation of 31,75,200 equity shares at a price of Rs 505 apiece. HDFC Bank and BoB Capital Markets are the lead managers to the issue, while Link Intime India is the registrar for the IPO. IRM Energy is a rising company in the CGD sector, serving a wide range of customers, operating in three states with promising growth prospects. The company has seen growth in its revenue and profits, but in FY23, it faced challenges due to higher costs caused by the geopolitical conflict, which put pressure on its profit margins, said Choice Broking. "At a higher price band, it is demanding a TTM P/E multiple of 29.8 times, which is at a premium to its adjusted peer average. The issue seems to be fully priced considering its subdued profitability and return ratios. Thus, we assign a 'subscribe with caution' rating for the issue," it added.  

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.

Also read: Hot stocks on October 19, 2023: Suzlon Energy, Ion Exchange, Astral, NBCC and more

Also read:  Jaiprakash Associates shares jump 21% in just two sessions; BSE seeks clarity on 'Adani deal'