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IRM Energy Ltd., a prominent city gas distribution company operating in several regions in India, is gearing up for its initial public offering (IPO) scheduled for October 18. The company aims to raise Rs 545.40 crore through a fresh issue of 1.08 crore shares, with the price band set within the range of Rs 480 to Rs 505 per share.
IPO Key Dates:
- Anchor investor bidding date: October 17.
- The issue opens on October 18.
- Issue closes: October 20.
- Listing date: October 31.
Total Issue Details:
- Total issue size: 1.08 crore shares.
- Fresh issue size: 1.08 crore shares.
- Total issue amount: Rs 545.40 crore.
Listing on: BSE, NSE.
IRM Energy’s Business Profile:
IRM Energy is a city gas distribution company with a significant presence in Gujarat, Punjab, Daman Diu, and Tamil Nadu. The company specializes in laying, building, operating, and expanding city or local natural gas distribution networks. IRM Energy undertakes natural gas distribution projects in designated geographical areas, catering to industrial, commercial, domestic, and automobile customers.
Utilization of Proceeds:
The proceeds generated from the IPO will be allocated as follows:
- Funding capital expenditure requirements for the development of the city gas distribution network in Tamil Nadu: Rs 307.26 crore.
- Pre-Payment/Re-Payment of all or a portion of certain outstanding borrowings: Rs 135 crore.
- General corporate purposes.
Pre-Offer Shareholding Pattern for IRM Energy:
| Shareholder | No. of Shares | Pre-Offer Share Capital |
|---|---|---|
| Promoters & Promoter Group | 20,558,773 | 67.94% |
| Public | 9,700,904 | 32.06% |
| Total | 30,259,677 | 100.00% |
IRM Energy’s financial data for the fiscal years 2021 (FY21), 2022 (FY22), and 2023 (FY23):
| Financials | FY23 | FY22 | FY21 |
|---|---|---|---|
| Revenue from Operations | $980.08M | $507.14M | $189.56M |
| EBITDA | $118.93M | $200.89M | $72.97M |
| EBITDA Margin | 12.14% | 39.61% | 38.49% |
| PAT | $63.14M | $128.02M | $34.88M |
Potential Risk Factors:
While IRM Energy’s IPO presents significant investment opportunities, potential investors should consider certain risk factors, including:
- Dependency on third parties for sourcing and transporting natural gas.
- The inherent hazards involved in the transportation of natural gas could lead to accidents.
- Equity shares issued during the past year at a price possibly lower than the IPO issue price.
- Vulnerability to network infrastructure breakdowns that may impact the sourcing and supply of natural gas.
- A typical 15-18 month period is required to generate revenue in their gross assets, with any delays affecting financial projections.
- Reliance on government policies for the allocation and cost of gas supplied for the company’s CNG and domestic PNG customers.
- The CNG business’s dependence on Oil Marketing Companies (OMCs) and third-party dealers for CNG filling station operations.
IRM Energy’s IPO holds promise for investors, with the company’s strategic focus on expanding its city gas distribution network and contributing to the growth of India’s gas distribution infrastructure. However, prudent consideration of the mentioned risk factors is essential for prospective investors.
Showcasing the peer comparison for IRM Energy:
| Company | Revenue (in Crores) | EBITDA (in Crores) | EBITDA Margin | PAT (in Crores) |
|---|---|---|---|---|
| IRM Energy | 980 | 119 | 12.14% | 63 |
| Gujarat Gas | 16,759 | 2,395 | 14.29% | 1,528 |
| Indraprastha Gas | 14,146 | 2,293 | 16.21% | 1,640 |
| Mahanagar Gas | 6,299 | 1,184 | 18.80% | 790 |
| Adani Total Gas | 4,378 | 887 | 20.26% | 546 |
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