IRM Energy Ltd, a leading player in the energy sector, successfully closed its ₹545.40-crore ($72.7 million) initial public offering (IPO) on Friday, October 20, 2023. The offering, which witnessed remarkable investor enthusiasm, was oversubscribed by 4.36 times on the second day of bidding. Investors displayed significant interest in the company’s growth potential, with subscriptions from non-institutional investors, retail individual investors, and qualified institutional buyers reaching 9.08, 4.36, and 1.18 times, respectively.
The IPO comprised 1.08 crore equity shares, with a price range of ₹480 to ₹505 per share, and successfully garnered over ₹160 crore from anchor investors. The proceeds from this offering are slated for utilization in the expansion of city gas distribution networks in Namakkal and Tiruchirappalli, Tamil Nadu, debt repayment, and other corporate purposes.
Prominent entities behind the IPO include Cadila Pharmaceuticals Limited, Dr. Rajiv Indravadan Modi, and IRM Trust. IRM Energy Ltd is reliant on third-party suppliers for its natural gas requirements and actively participates in the development of natural gas distribution projects. As of June 30, 2023, the company’s operations were primarily centered around Compressed Natural Gas (CNG) and industrial Piped Natural Gas (PNG) supply operations.
It’s worth noting that the company has had its share of legal challenges, including two criminal litigations, 29 regulatory actions, and 12 material tax litigations. Despite these issues, several brokerages, including SBI Securities, have issued a “Subscribe” rating, primarily driven by the company’s promising long-term growth prospects. However, it’s essential to acknowledge that any decline in sales could potentially impact the company’s financial stability.
Moreover, some directors of IRM Energy have connections with Diamond Power Infrastructure Limited, a company whose shares were suspended during their tenure. Additionally, Dr. Rajiv Indravadan Modi served on the board of the now-delisted Casil Health Products Limited.
BoB Capital Markets and HDFC Bank managed the IPO, and the company’s shares will be listed on both the BSE and NSE. The allotment of IRM Energy’s IPO shares is scheduled for October 27, 2023. The grey market premium, which indicates unofficial trading activity, currently stands at ₹45 per share, underlining the strong investor interest. The estimated listing price for IRM Energy shares is ₹550 apiece.
