IRM Energy IPO subscribed 9.2 times on Day 3 so far; bidding closes today

The initial public offering (IPO) of IRM Energy continued to witness a robust response from all the categories of investors during the third and final day of the bidding process. The issue was overall subscribed 1.74 times on day one, while it ended day two with 4.40 times subscription. Cadila Pharma-backed IRM Energy is offering shares in the price band of Rs 480-505 per share with a lot size of 29 equity shares. The city gas distribution player is raising 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 7,01,33,484 equity shares, or 9.20 times, compared to the 76,24,800 equity shares offered for the subscription by 1.00 pm on Friday, October 20. The three-day bidding will close today, that is, Friday. It kicked off for bidding on Wednesday. The portion reserved for non-institutional investors (NIIs) was subscribed 24.90 times, while the allocation for retail investors saw a subscription of 6.72 times. The quota set aside for qualified institutional bidders (QIBs) was subscribed 2.55 times, while the allocation for employees was booked 1.52 times as of the same time. Majority of the brokerage firms, which track the issue, remain positive on it and have a subscribe rating. They have cited reasonable valuations compared to peers, strong business prospects of the company, expansion plans to boost growth and sound balance sheet as the key reasons for it. IRM Energy also benefits from its strong parentage of Cadila Pharmaceuticals which has aided the business in overcoming certain entry barriers such as the requirement of large investments in this sector. The business has recorded a healthy volume CAGR growth of 76.58 per cent in FY23 while its ROE and ROCE ratios stood at 18.2% and 14.2 per cent in FY23, said StoxBox. "The share of natural gas in India’s primary energy mix has increased to 6.5 per cent. On the upper price band, the issue is valued at a P/E of 24.1 times based on FY2023 earnings, which is fairly valued compared to the average industry P/E of 43.9 times. We, therefore, recommend a 'Subscribe' rating for the issue," it added. IRM Energy raised a total of Rs 160.35 crore from anchor investors. It allocated 31,75,200 equity shares at a price of Rs 505 apiece. Shares of IRM Energy will be listed on both BSE and NSE. 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 looking to benefit from share of natural gas in the primary consumption to increase 240 per cent by FY30, market leaders amongst peers as gas distribution infrastructure sector logged 21 per cent CAGR pan-India during the period, it is sole distributor of CNG and PNG in the GAs authorized by PNGRB, said SMIFS. "IRM exhibited high revenue growth, driven by demand generated from all the CGD segments. IRMEL has a consistent track record of growth in volumes which impacted revenues and profits positively. Considering the high growth rates, the company is expected to clock along with strong parentage , we recommend to subscribe to the issue as a very good long term bet," it  said.  

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