IPO update: Heranba Industries public issue to open next week; check issue price, size, other details

Continuing the spree of initial public offerings (IPO), agrochemical firm Heranba Industries’  public issue will open for subscription next week. The Gujarat-based agrochemical company is looking to raise Rs 625 crore from capital markets through the issue which will be a mix of an Offer for Sale (OFS)  by existing shareholders and a fresh issue of equity shares. Heranba Industries will join peers such as Rallis India, Dhanuka Agritech, Sumitomo Chemical India, and PI Industries, among others on the stock exchanges.

Heranba’s IPO includes an OFS by promoters Sadashiv K. Shetty and Raghuram K. Shetty. Along with the promoters, Babu K. Shetty, Vittala K. Bhandary, and SAMS Industries Limited. The promoters will be seeling more than 81.22 lakh equity shares. Fresh issue portion of the IPO will be worth Rs 60 crore. Heranba will only be receiving this portion of the issue amount. The company, in its RHP, said that the firm plans to use the amount to fund working capital requirements and to fund expenditures for general corporate purposes

Investors can bid for the issue in the price band of Rs 626-627 per share. The minimum bid size has been decided at 23 equity shares and multiples thereafter. This would translate into a minimum bid price of Rs 14,421. The issue opens for subscription on February 23 and closes on February 25. 50% of the issue will be reserved for Qualified Institutional Buyers (QIB), 15% will be available for Non-Institutional Investors (NII) and the remaining 35% is for Retail investors. 

Axis Capital in a note earlier said that the FY20 EPS of the company is Rs 25.03, with a return on net worth of 30.47%. Peers such as Rallis India and Sumitomo Chemicals currently trade at a P/E ration of 29.67 and 72.11.

Heranba Industries earns 49% of its revenue from exports, whereas 87% of the revenue comes from institutional customers. The company has a diverse customer base with only 20% of the total revenue coming from the top 10 customers. The company exported their products to more than 60 countries in Latin America, CIS, Middle East, Africa, Asia and South East Asia in the previous fiscal year. Heranba’s management said that it has started the process of entering developed markets such as the USA and Europe.