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  • Writer's pictureJatin Agarwal

IRM Energy IPO


IRM Energy Logo

Company and IPO Overview:


IRM Energy is engaged in the business of laying, building, operating, and expanding the city or local natural gas distribution network. It is an integrated value-driven energy enterprise, developing natural gas distribution projects in geographical areas (GAs) for industrial, commercial, domestic, and automobile customers. Natural gas demand from the CGD sector is likely to log growth at 15-16% CAGR between Fiscal 2022 and Fiscal 2030.


IRM Energy has positioned itself as the provider of one of the safest, cleanest, and most cost-effective fuels for households, commercial establishments, and industrial units as well as for fuel requirements in the transport segment. IRM Energy distributes CNG for use in motor vehicles and PNG for use by domestic households as well as for commercial and industrial units. The company was recognized as the ‘City Gas Distribution - Growing Company of the Year 2020’ by Federation of Indian Petroleum Industries (“FIPI”).


IRM Energy has marked its presence in Banaskantha District in the state of Gujarat, Fatehgarh Sahib in the state of Punjab, and Diu & Gir-Somnath in the Union Territory of Daman & Diu and the state of Gujarat. The company is fulfilling the natural gas requirements of 48172 domestic clients, 179 industrial units, and 248 commercial clients. The company has received an award of City Gas Distribution- Growing Company of the Year 2020 from the Federation of Indian Petroleum Industries.


IRM Energy IPO is also a main board IPO which is ready to go public, the company is about to raise around ₹545.40 crores via IPO comprising Fresh Issue only. The price band of the issue is ₹480 to ₹505 with a minimum market lot of 29 shares. IRM Energy IPO subscription quota for retail is 35.00%, NII is 15.00% and QIB is 50.00%.


Financials (rounded off):

Date

Total Revenue (₹ in cr)

​​​PAT (₹ in cr)

​31/03/2021

213

35

31/03/2022

549

128

31/03/2023

1045

63


Objectives of the Issue:

1. Funding capital expenditure requirements for the development of the City Gas Distribution network in the Geographical Areas of Namakkal and Tiruchirappalli (Tamil Nadu) in Fiscal 2024, Fiscal 2025, and Fiscal 2026.

2. Prepayment or repayment of all or a portion of certain outstanding borrowings availed by the Company.


IPO Details:

IPO Date

18/10/2023-20/10/2023

Face Value

₹10 per share

IPO Price Band

₹480-₹505 per share

IPO Lot Size

29 Shares

Listing at

NSE, BSE

Basis of Allotment

27/10/2023

Credit of Shares in Demat

30/10/2023

Listing Date

31/10/2023

Pre-Issue Shareholding

67.94%

Post-Issue Shareholding

-

Retail Minimum Lot Size

29 shares (₹14,645)


Valuations & Margins:

Indicators

FY 21

FY 22

FY 23

EPS

12.39

43.88

20.93

P/E

-

24.13

21.95

EBITDA (%)

38.49

39.61

12.14

ROCE (%)

19.98

39.01

14.19


Important things to note about the Company:


Top reasons to consider the IPO:


1. Exclusivity in CNG and PNG supply in the awarded Gas.


2. Successful development and operation of CGD business.


3. Diverse customer portfolio and distribution network of CNG and PNG.


4. Strong parentage, experienced board and management team and strong execution team.


Risk Factors to watch out in the IPO:


1. Dependency on third parties for sourcing and transportation of natural gas may adversely affect their business, reputation, results of operations, and cash flows.


2. Too much dependency on Government policies may lead to a reduction in the allocation of natural gas or any increase in the cost of gas.


3. Company's operations are restricted to defined geographical boundaries and the natural gas requirements in these regions may be affected by various factors outside their control.



Crisp Insights:

  • IRM Energy IPO GMP Today: The Company is commanding a GMP of Rs.100.

  • IRM Energy GMP is good and hence, listing gains are possible.

  • IRM Energy IPO Review: IRM is an emerging player in the CGD segment with penetration in three states where ample opportunities are envisaged. Based on annualized FY24 numbers, the issue appears fully priced. It is a long racehorse. Investors may park funds for medium to long-term rewards.


Disclaimer: All information is provided for educational and informational purpose only. Data is fetched from publicly available sources such as the DRHP filed by the company. The website or the author takes no guarantee for the accuracy of the data however, we have tried our best to present accurate data to out readers. Please consult a financial advisor or do your own analysis before investing/trading in the stock market.

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