Heranba Industries shares made a stellar listing on the stock exchanges today, unscathed by the mildly weak market sentiment. Shares of the company began trading at Rs 900 per share, up 43.54% from the IPO price of Rs 627 apiece. On listing, Heranba Industries was commanding a market capitalisation of Rs 3,600 crore. Global markets were jittery on Friday as bond yields in the United States rose again. The IPO of the company was oversubscribed 82 times with retail investors bidding for 11.84 times their portion, Non-Institutional Investors (NII) bid for a whopping 271 times and Qualified Institutional Buyers (QIB) subscribed their portion 67 times.
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The agrochemical firm has managed to raise Rs 625 crore through the IPO. Of this, Rs 60 crore is a fresh issue while the remaining is an Offer for Sale (OFS) by existing shareholders. Post issue, the promoter and promoter group shareholding in the company has dropped to 74.15%, from 98.85% earlier. Public shareholding has increased to 25.85% from 1.15% prior to the issue.
Heranba Industries manufactures intermediates, technicals and formulations and is one of the leading domestic producers of synthetic Pyrethroids. Domestic pyrethroid manufacturers, including Heranba Industries, are expected to benefit from China’s crackdown on pollution which has led to the closing of many chemical plants. The Pyrethroids market in India is projected to grow at a CAGR of 8.5% in 2020-25, reaching a production volume of 25,398 tonnes by 2025, said ICICI Direct in a note.
The company has a presence in a wide range of products across the entire value chain of synthetic pyrethroids with global outreach and a wide distribution network. “Heranba has an extensive distribution network in India supported by a skilled sales force. It has more than 9,400 dealers having access to 21 depots across 16 states and one union territory in India supporting the distribution of its products,” domestic brokerage firm Choice Broking said.
Heranba Industries counts companies like Sumitomo Chemical India, Sulphur Mills, Biostadt India, Crystal Crop Protection, NACL, PI Industries, Krishi Rasayan Group, Agro Life Science Corporation and Shanghai Agricare Chemical Company. Only 19% of its total revenue comes from the top 10 customers.
On the upper end of the price band, ICICI Direct valued the company at a P/E of 25.7x FY20. Choice Broking said that the company is demanding a TTM P/E multiple of 25.7x (to its restated TTM EPS of Rs 24.4), as compared to the peer average of 27.4x. Religare Broking valued it at a PE of 25x EPS FY20.