The listing of crop protection chemical manufacturer Heranba Industries seems to be a on a strong footing as its IPO grey market premium jumped sharply to 38 percent within a week. The renewed strong momentum in the equity market on falling US bond yields and strong FII inflow could be one of reasons for upside in grey market premium. The Nifty50 itself gained over 4 percent this week after falling around 6 percent in previous two weeks.
Shares were traded at a premium of Rs 230-240 in the grey market i.e. 37-38 percent premium (Rs 857-867) over issue price of Rs 627, the data available on the IPO Watch showed.
In fact, the premium has increased significantly from Rs 140-150 quoted in the grey market last week, which was 22-24 percent higher compared to issue price.
The initial public offering of Heranba Industries witnessed strong subscription of 83.29 times during February 23-25 as the reserved portion of non-institutional investors was subscribed 271.15 times and that of qualified institutional buyers 67.45 times. The portion set aside for retail investors saw subscription of 11.84 times.
The agrochemical company raised Rs 625 crore through its public issue which comprised a fresh issue of Rs 60 crore and an offer for sale of 90.15 lakh equity shares by promoters. The fresh issue proceeds will get utilised for working capital requirements.
The company is expected to list its equity shares on March 5. It finalised the IPO share allocation on March 2.
"The company has a robust past track record of performance. In the future, we expect company to gain market share and improve margins. The company has priced its issue at 22.1x PE on a trailing basis, which is quite reasonable by looking at the future prospects of the company," Keshav Lahoti, Associate Equity Analyst at Angel Broking told Moneycontrol.
"Heranba's return ratios are superior to peers (return on equity is above 30 percent). It has a strong financial position and has been generating positive cash flow. We expect a good listing for the company," he said.
Easy Trip Planners fixes IPO price band at Rs 186-187; issue opens on March 8
Gujarat-based Heranba Industries is mainly into crop protection business, manufacturing chemicals, marketing and exporter of it. It manufactures intermediates, technicals and formulations. In domestic space it is one of the leading producers of synthetic pyrethroids like cypermethrin, alphacypermethrin, deltamethrin, permitherin, lambda cyhalothrin etc, with 19.5 percent market share in 2019. Their Pesticides range includes insecticides, herbicides, fungicides and public health products for pest control.
Heranba has more than 9,400 dealers/distributors supported by their 21 stock depots spread across 16 states and 1 union territory in the country in order to meet the demand of their products from farmers. As of November 2020, its international distribution partners successfully obtained 371 registrations of their technicals and formulations in 41 countries across Middle East, CIS, Asia, South East Asia and Africa.