IRM Energy Limited debuts at a 5% discount, opening at Rs 479 on the BSE today!

IRM Energy Limited, a gas distribution company engaged in the development, operation, and expansion of a local natural gas distribution network, made its debut on the Indian stock market today.

The stock debuted at Rs 479 per share, representing a 5% decline compared to the issue price on the BSE. However, on the NSE, the stock opened at Rs 477.25 per share, marking a 5.5% decline from its initial public offering price of Rs 505 per share.

At the time of writing, the stock is trading at Rs 458 per share on the BSE, with intraday highs and lows of Rs 482 and Rs 456, respectively. The current market capitalisation of the company stands at Rs 1,880 crore.

HDFC Bank Limited and BOB Capital Market Limited are the book-running lead managers of the IRM Energy IPO. At the same time, Link Intime India Private Ltd is the registrar for the issue.

IPO Proceeds: 

The company intends to allocate the net proceeds from the issue to support the following objectives. Firstly, it will finance the capital expenditure needed for expanding the city gas distribution network in the geographical areas of Namakkal and Tiruchirappalli in Tamil Nadu during FY24, FY25, and FY26. Secondly, it will use a portion of the proceeds for the prepayment or repayment of specific outstanding borrowings. Finally, the remaining funds will be directed toward general corporate purposes.

Company profile:

IRM Energy Limited operates as a gas distribution firm dedicated to developing, operating, and expanding local natural gas distribution networks. With a strong commitment to value-driven energy solutions, the company serves a diverse clientele encompassing industrial, commercial, domestic, and automotive customers.

The company has established a significant presence in various regions, including Banaskantha District in Gujarat, Fatehgarh Sahib in Punjab, and Diu & Gir-Somnath in the Union Territory of Daman & Diu as well as the state of Gujarat. Currently, IRM Energy meets the natural gas needs of 48,172 domestic customers, 179 industrial units, and 248 commercial clients. According to the latest update, IRM Energy operates a significant network of 216 CNG gas stations across its designated geographical areas.

Subscription details: 

On October 20, 2023, the final day of the IPO window, the IPO witnessed an impressive response with a subscription rate of 27.05 times. The public issue received mixed interest, as the retail category was subscribed 9.29 times, the QIB category achieved a subscription rate of 44.73 times, and the NII category reached a subscription rate of 48.34 times.

The company attracted Rs 160 crore from various anchor investors by allocating 31.75 lakh equity shares at Rs 505 per share. The complete lock-in period for these anchor investors ends on March 6, 2024.

The IPO price range was set between Rs 480 and Rs 505, with a face value of Rs 10 per share and a lot size of 29 shares. The total size of the company’s IPO was Rs 545 crore, and the final share issue price was fixed at Rs 505 each.

Financial Performance: 

Conclusion: 

The crucial question that arises in everyone’s mind is whether to hold the shares. Given the current market conditions, where broader indices have fallen from their all-time highs and today have dipped below the 19,000 levels, investors who applied solely for listing gains were disappointed on the listing day itself because the stocks were listed at a discount. As a result, investors may be considering closing their positions. The broader market weakness could also be a contributing factor to the weak listing.

On the other hand, investors with a higher risk appetite may choose to hold the shares for the medium to long term, a strategy that is beneficial.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.