IRM Energy IPO, backed by Cadila Pharmaceuticals to open on October 18; sets price band at Rs 480-505

11 Oct 2023 , 09:45 AM

IRM Energy, a Gujarat-based city gas distribution company backed by Cadila Pharmaceuticals, is preparing to launch its maiden initial public offering (IPO). Here are some key details about the IPO:

1. Price Band: The price band for the IRM Energy IPO is set at Rs 480 to Rs 505 per share.

2. Fundraising: The company aims to raise Rs 545.40 crore from the public offer by issuing 1.08 crore equity shares at the upper price band.

3. Offer Components: This IPO comprises only a fresh issue component, meaning that all the proceeds will go to the company, and there is no offer-for-sale portion.

4. Opening Date: The IPO will open for subscription on October 18, 2023.

5. Anchor Investor Date: The company has allotted a day, October 17, for anchor investors to bid.

6. Closing Date: The closing date for the IPO subscription is set as October 20, 2023.

7. Market Capitalization: At the upper price band, the total market capitalization of IRM Energy would be approximately Rs 2,073.5 crore.

8. Bid Size and Limits for Retail Investors: Retail investors can bid for a minimum of 29 equity shares and in multiples of 29 shares thereafter. The minimum application size for retail investors would be Rs 14,645 for 29 shares, with a maximum investment limit of Rs 2 lakh.

9. Employee Reservation: The company has reserved 2.16 lakh shares, worth Rs 10.91 crore, for its employees, who will receive these shares at a discount of Rs 48 per share to the final issue price.

10. Allocation: The allocation of shares includes a portion for qualified institutional buyers (half of the net issue), high net-worth individuals (15 percent), and retail investors (35 percent).

11. Utilization of Funds: IRM Energy plans to utilize Rs 307.26 crore from the IPO proceeds for the development of the city gas distribution network in the geographical areas of Namakkal and Tiruchirappalli (Tamil Nadu) over the next few years. Additionally, Rs 135 crore will be allocated for debt repayment, and the remaining funds will be used for general corporate purposes.

12. Company Operations: IRM Energy operates in several locations, including Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath (Union Territory of Daman and Diu/Gujarat), and Namakkal & Tiruchirappalli (Tamil Nadu). The company’s business involves laying, building, operating, and expanding city or local natural gas distribution networks.

13. Financial Performance: The company reported a significant increase in revenue from operations, which reached Rs 1,039 crore in FY23, up from Rs 546.1 crore in the previous year. However, the net profit for FY23 decreased to Rs 63.15 crore, compared to Rs 128 crore in the previous year, primarily due to a substantial rise in the cost of purchases of stock-in-trade of natural gas.

14. Promoters and Shareholding: Dr. Rajiv Indravadan Modi, Cadila Pharmaceuticals, and IRM Trust are the promoters of the company, holding 67.94 percent of shares. The remaining stake is held by public shareholders, including Enertech Distribution Management (28.65 percent) and Shizuoka Gas Company (2.94 percent).

15. Competitors: IRM Energy competes with other city gas distribution companies like Gujarat Gas, Indraprastha Gas, Mahanagar Gas, and Adani Total Gas.

16. Allotment and Listing: The basis of allotment for IPO shares is expected to be finalized by the end of October 26. Equity shares will be transferred to eligible investors’ demat accounts by October 30. The listing of IRM Energy’s equity shares is scheduled to take place on October 31, following a T+6 timeline.

17. Merchant Bankers and Registrar: HDFC Bank and BOB Capital Markets are the merchant bankers for the IPO, and Link Intime India is the registrar to the issue.

IRM Energy fulfills the natural gas requirements of 48172 domestic clients, 179 industrial units, and 248 commercial clients. It has also received an award of City Gas Distribution- Growing Company of the Year 2020 from the Federation of Indian Petroleum Industries.