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Heranba Industries IPO Opens: Should You Invest?

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Amid IPO rush, another IPO by agrochemical company has opened for public subscription today to garner Rs. 625 crore. Here are the details on the issue before you consider it for subscription:

Heranba Industries IPO Opens: Should You Invest?
 

1. Issue details: The issue will remain open until February 25, 2021

The issue comprises fresh issuance of capital of Rs. 60 crore and the remaining is an OFS by promoters of the company. And post the issue, promoter's share will come down to 74 percent.

Price band has been Rs. 626-Rs. 627 per share

And minimum subscription shall be for 23 shares, taking the application size as Rs. 14421.

2. Issue objective: From the fresh issue funds will be put towards working capital needs and general corporate purposes.

3. Company details:

Heranba Industries is a crop protection chemicals manufacturer, exporter and marketing company. Besides its presence in the country, it also actively exports to more than 60 nations.

4. Financials:

Over the financial year 2018-20, the company has shown revenue growth by 13% CAGR. Also, EBIDTA has recorded a surge of 21 percent and net profit by 44 percent CAGR.

5. Brokerages' take on the issue:

Owing to the healthy balance sheet as well as strongest return ratio, the issue has been given a 'Subscribe' rating by ICICI Direct. Also, the issue is said to available at a reasonable valuation in comparison to peers of 18.9X P/E. "We assign a "Subscribe" rating for the issue on a long-term basis considering the strong distribution network, increasing export opportunity with healthy margins and profitability," analysts at Geojit said.

Analysts expect growth prospects to remain decent, going ahead. "Given huge opportunity in domestic and international space in agri and chemical space along with growing importance of domestic manufacturer globally, the growth trajectory of Heranba Industries is expected to sustain," said analysts from Reliance Securities Ltd in a report on 22 February. The broking firm also added, "Additionally, Heranba has already built sufficient resources in terms of land and other resources to set-up additional manufacturing unit, which bodes well."

 

6. Listing gains possibility for Heranba Industries:

Indices are heading lower for fifth consecutive, today propelled by losses in the banking and financial pack, and if this weakness sustains, then listing gains for the issue shall not be possible.

Some weakness in the market has been shed off but the grey market has given a thubs up to the issue of Heranba. And as per an ET report, in the unofficial market, the premium for the issue surged by as much as Rs. 200 to Rs. 210 and this means a gain of 33 percent.

This signifies that grey market premium for the stock has remained stable and investors are eyeing some gains from the issue owing to its cheaper valuations. Further what rules in favour for the company is the government's push for the agriculture sector as well as chemicals industry is being favoured among investors.

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