The grey market has given a thumbs up to the issue, with the premium in the unofficial market surging to Rs 200-210, which translates into one-third, or 33 per cent, of the IPO price band at Rs 626-627.
The primary market has remained jubilant in the past few months, as new-age investors are lapping up almost every issue, trying to make a quick buck. And the grey market has been celebrating the same.
Heranba Industries, a Gujarat-based crop protection chemicals manufacturer, is likely to sweep up Rs 625 crore via its initial public offering. The IPO will open for subscription on Tuesday, February 23, and close on Thursday, February 25.
This offer comprises fresh issue of shares worth Rs 60 crore and an offer for sale of 90,15,000 shares by the promoters. The quota for retail investors has been fixed at 35 per cent, while qualified institutional buyers can bid for 50 per cent, and NIIs 15 per cent.
Abhay Doshi, Founder, Unlisted Arena, said the grey market premium has remained stable for the stock, as investors feel the comparatively cheaper valuation has left something on the table for investors. Based on basic EPS for the year ended March 31, 2020, the shares are being issued at 25 times, which is at a good discount to the industry average of 61 times.
Doshi, who tracks the grey market, said the company has a diversified customer base. “Thus, a large chunk of revenue is not concentrated with some big names," he pointed out
For the first half of FY21, the company clocked total revenue of Rs 619.21 crore, which generated a net profit of Rs 66.31 crore. The company grossed revenue of Rs 967.9 crore in the previous financial year, with a net profit of Rs 97.75
Narottam Dharawat of Mumbai-based Dharawat Securities said the chemicals sector has been the flavour among investors. The government focus on the agricultural sector also adds to the attractiveness of the sector.
"The booster for sectorial sentiment will lift the issue," he said. “Do remember, recently listed chemicals names like Chemcon, Neogen and Rossari have delivered handsome listing gains to investors."
Heranba Industries is an agro-chemicals manufacturer, exporter and marketeer based out of Vapi, Gujarat, with corporate and administration offices in Mumbai.
It manufactures intermediates, technicals and formulations and is the producer of synthetic pyrethroids like cypermethrin, alphacypermethrin, deltamethrin, permethrin, lambda cyhalothrin, etc.
Domestic institutional sales of technicals contribute 32.99 per cent of revenue, while technical and formulation exports contribute 41 per cent. The rest comes from the branded formulations and public health segments. For the six months ended September 30, the company’s revenues stood at Rs 618.35 crore.
Emkay Global Financial Services and Batlivala & Karani (B&K) Securities India are the book running lead managers to the IPO, while Bigshare Services is the registrar of the issue. The scrip will be listed on both BSE and NSE.
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