Gujarat-based agrochemical company Heranba Industries Ltd. received approval from SEBI to float public issue worth Rs 625 crores. Once launched, it will be the eighth IPO of 2021. The issue will open during the last week of February. Before the IPO opens, let’s look at the vital points associated with it to decide its potential.
Initial public offerings are regarded as a good investment for investing in company shares at a low price for long term purpose. If you are a new investor, IPOs allows you to invest in companies with long term growth potential at the early stage. But, does that mean that you should invest in all the IPO offers? Let’s find out.
It is important to analyse the pros and cons of an IPO offer, along with company financials and growth potential before you invest.
Our Heranba review covers important dates, lot size, company details, and industry analysis before the issue opens.
Heranba Industries IPO Details
If you are a new investor interested in investing in IPO shares, it is important to learn the following details before deciding. It will help you get a fairer idea of when the bidding starts, issue size, the purpose of the IPO, and more.
- First off, you need to know the Heranba IPO dates. The offer is opening on February 23, and the bidding window will remain open for two days until February 25, 2021
- All IPOs should be backed by ASBA, a self-authorisation which allows banks to block fund in the investor’s account till the entire bidding process gets completed and the shares are credited. You can download a blank ASBA form from NSE or BSE websites
- The shares will launch in the fixed price band of Rs 626-627 as the issuer plans to raise Rs 625 cores from the market
- The issue size contains fresh scrips and OFS shares from promoters respectively worth Rs 60 crores and Rs 565.24 crores
- The minimum lot size is 23 shares, which means your minimum investment amount will be Rs 14,421
- You can increase the bidding size upto 13 lots or 299 shares for an investment amount of Rs 187,473
- The company proposes to use the proceeds from the fresh issues to meet working capital requirements and general corporate expenditures
- Ahead of the IPO, the company shares are trading at a GMP (grey market premium) of Rs 180-185
Company Analysis & Industry Overview
- Heranba Industries is a major player in the agrochemical segment. It is one of the largest domestic producers of synthetic pyrethroids
- If you are not aware, the agrochemical companies produce fertilisers, pesticides, fungicides and other chemicals widely used in the agricultural sector
- The Gujarat-based company has three manufacturing units and a research and development unit in Vapi, where it procures a range of products under the categories of intermediates, formulations, technicals, and public health
- The company sells its products through a strong network of 9400 distributors in 16 states and one union territory, and exports to 60 countries
- Now let’s look at the potential of the pyrethroids industry. The segment grew at a CAGR of 7.4 percent between 2014-2019 and expected to become USD 205 million industry in 2025 at a CAGR of 19.6 percent
- Side by side, the agrochemical industry is expected to register a CAGR of 1.89 percent between 2019 and 2025
Among the company’s strengths,
- Heranba Industries Ltd. has a long record in the industry. The company is more than two decades old
- Range of product portfolio with a leading position in producing pyrethroids
- Domestic and global reach with a strong network of domestic and international distributors
- Large domestic customer base
- Strong financials. The company earned a profit (PTA) of Rs 663.11 million in September 2020 against revenue of Rs 6,192.11 million
Cons of Heranba IPO
- Only 20 percent of the company’s consumers are large customers. A lack of large customers can impact its performance
- A significant portion of the company’s customers are institutional customers, and their performance (loss) would impact the profitability of Heranba
Hope the information helps you make a prudent decision on Heranba IPO.
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