IRM Energy Ltd. IPO - Review, Valuation, Date & GMP Today

IRM Energy Limited - Complete Overview

Established in 2015, IRM Energy Limited specializes in the development, construction, operation, and expansion of city and local natural gas distribution networks.

The company serves two primary customer segments:

1. CNG (Compressed Natural Gas): CNG customers include operators of public transport vehicles such as taxis, and auto-rickshaws, as well as private vehicles like cars, buses, light goods vehicles, and heavy goods vehicles.

2. PNG (Piped Natural Gas): PNG customers fall into three categories, comprising industrial PNG (for small, medium, and large-sized enterprises), commercial PNG (including hotels, restaurants, bakeries, hostels, and community halls), and domestic PNG (mainly used for cooking purposes).

In recognition of its efforts, the company received the 'City Gas Distribution - Growing Company of the Year 2020' award from the Federation of Indian Petroleum Industries ("FIPI").

IRM Energy Limited has established its presence in regions including Banaskantha, Fatehgarh Sahib, Diu & Gir Somnath, and Namakkal & Tiruchirappalli.

The company efficiently caters to the natural gas requirements of 48,172 domestic clients, 179 industrial units, and 248 commercial clients. As of June 30, 2023, the company has achieved a revenue of Rs 248.63 lakhs.

 

What does the company do?

IRM Energy Limited specializes in the development, construction, operation, and expansion of city and local natural gas distribution networks.

 

 

IPO Overview 

IRM Energy Limited's IPO date is set to be available for subscription from October 18, 2023, to October 20, 2023. The IPO is expected to be listed on the share market by October 31, 2023.

The company aims to raise Rs. 545.40 Crores through this upcoming IPO to achieve specific objectives. The IRM Energy Limited IPO price falls within the range of Rs. 480 to Rs. 505 per share.

It's worth noting that this IPO follows the Book Built Issue format. Continue reading for the detailed IPO review.

 

IRM Energy Limited IPO timetable (Tentative)

Events	Date
IPO Opening Date	18 October 2023
IPO Closing Date	20 October 2023
IPO Allotment Date	27 October 2023
Refund initiation	27 October 2023
IPO Listing Date	31 October 2023

 

IRM Energy Limited IPO Details

IPO Opening & Closing Date	18 October to 20 October 2023
Face value	Rs.10 per share
Issue Price	Rs. 480 to Rs. 505 per share
Lot Size	29 Shares
Price of 1 lot	Rs. 14,645
Issue Size	10,800,000 Shares (aggregating up to Rs. 545.40 Cr)
Fresh issue	10,800,000 Shares (aggregating up to Rs. 545.40 Cr)
Employee Discount	Rs. 48 per share
Listing at	BSE, NSE
Issue Type	Book Built Issue IPO
Registrar	Link Intime India Pvt. Ltd.

 

IRM Energy Limited IPO Lot Details 

Minimum Lot Investment (Retail)	1 Lot
Maximum Lot Investment (Retail)	13 Lot
Minimum Lot Investment (HNI)	14 Lot
Maximum Lot Investment (HNI)	68 Lot

 

IRM Energy Limited IPO Reservation

Institutional share Portion	50%
Non-institutional share Portion	35%
Retail share Portion	15%

 

Company Financial

Amount in Crores

Period	31 Mar 2023	31 Mar 2022	31 Mar 2021
Total Assets	792.90	554.80	338.11
Total Revenue	1,045.10	549.19	212.54
PAT	63.14	128.03	34.89
Net worth	346.42	243.72	117.60
Reserve & Surplus		193.30	67.57
Total Borrowings	303.83	202.59	163.35

 

Revenue breakdown (net of excise duty and including compression income and gas trading) from the two segments

(Amount in Million)

Particulars	CNG	PNG
Three months ended June 30, 2023	1,162.01	1,128.65
Three months ended June 30, 2022	1,063.82	1,074.32
Fiscal 2023	4,132.37	5,629.64
Fiscal 2022	2,577.38	2,464.71
Fiscal 2021	1,413.67	460.92

 

Objective of the Issue 

The company intends to allocate the Net Proceeds from the Issue to the following objectives:

• Funding the capital expenditure requirements for expanding the City Gas Distribution network in the geographical areas of Namakkal and Tiruchirappalli (Tamil Nadu) during Fiscal 2024 (from December 1, 2023, to March 31, 2024), Fiscal 2025, Fiscal 2026, and Fiscal 2027 (from April 1, 2026, to September 30, 2026).
• Prepaying or repaying all or a portion of specific outstanding loans obtained by the company.
• Addressing general corporate needs.

 

Promoters and Management of IRM Energy Limited

Dr Rajiv Indravadan Modi, Cadila Pharmaceuticals Limited, and IRM Trust are the promoters of IRM Energy Limited.

Pre-issue Promoter Shareholding	67.94%
Post-issue Promoter Shareholding

 

Peer Comparison

Company Name	EPS (Rs.) Diluted	P/E Ratio	Total Revenue (in Rs. millions)
IRM Energy Limited	20.93	Not applicable	9,800.89
Gujarat Gas Limited	22.20	18.69	1,67,594.00
Indraprastha Gas Limited	23.42	19.21	1,41,458.50
Mahanagar Gas Limited	79.98	12.64	62,992.80
Adani Total Gas Limited	4.97	125.18	43,781.90

 

IPO's Valuations 

To assess the IPO valuation, we can utilize the information provided by the company. IRM Energy Limited IPO price has been set within the range of Rs. 480 to Rs. 505 per share, and the EPS is Rs. 12.39. When considering the higher end of the issue price range, the P/E ratio is at 40.75.

 

Dividend Policy 

The company paid a dividend of Rs 0.50 per equity share in July 2023 and March 2023. As per the IRM Energy Limited IPO DRHP, investors are cautioned not to rely on past dividends as an indication of the company's future performance.

 

IPO's Strengths 

• Exclusive rights in the supply of CNG and PNG within the awarded gas territory.
• Effective establishment and operation of the CGD (City Gas Distribution) business.
• A varied customer base and a well-established network for the distribution of CNG and PNG.
• Solid backing from a reputable parent company, a skilled board and management team, as well as a proficient execution team.
• Embracing technology and digital initiatives to enhance operational efficiency.
• Access to gas pipelines and the establishment of cost-effective sourcing arrangements for gas.
• Demonstrated strong financial performance characterized by consistent growth and profitability, driven by sound operational efficiency and favourable regulatory conditions.

 

IPO Weaknesses

• The transportation of natural gas carries inherent hazards that could lead to accidents.
• The company must obtain various licenses and approvals to conduct its business.
• Typically, it takes the company 15-18 months to start generating revenue in the gas sector.
• The company's Promoters are involved in two criminal litigations, 29 regulatory actions, and 12 significant tax litigations, as per the company's Materiality Policy.
• The company's operations rely on Government policies for the allocation and pricing of natural gas supplied to its CNG and domestic PNG customers.
• The establishment of the company's city gas distribution network is contingent upon obtaining authorization from the PNGRB.
• The CNG business of the company depends on OMCs (Oil Marketing Companies) and third-party dealers to operate CNG filling stations.
• After the expiration of marketing exclusivity, the company may face competition from existing players operating in the same industry.
• The company faces certain pending litigation, and an unfavourable outcome could have adverse effects on its business, reputation, and financial results.

 

IPO GMP Today

The Latest GMP of IRM Energy IPO GMP today is Rs. 80.

 

 

Conclusion

The company is a rising contender in the CGD sector, having expanded its reach into three states, where substantial growth prospects are anticipated. Although the company has encountered growth fluctuations stemming from the Ukraine-Russia conflict, the management remains resolute about achieving improved future growth. Investors should consider evaluating all relevant factors before considering an investment in this offering to maximize their potential returns.

 

Finowings IPO Analysis

Hope you enjoyed the Finowings IPO Analysis. We tried our best to give every required detail about the company that you should know before applying to the IPO. 

You must consult your financial advisor before making any financial decisions. 

To Apply for the IPO, Click Here.

 

To Read the Prospectus of the Company Click Here to Download the DRHP.

 

 

Thank You for reading this blog.
Hope you loved the IPO analysis.
Please Comment Below with your feedback because Your feedback motivates us to deliver more such content.

 

Follow MUKUL AGRAWAL for the latest IPO news and reviews. You can connect with us on social media platforms like Twitter, Facebook, and Instagram. You can also subscribe to our YouTube Channel for the latest videos of the stock market.