Post-listing, the stock fell further and hit an intraday low of Rs 465 on the NSE and BSE. At 10:04 am, IRM Energy was trading at Rs 468, 7 percent lower than its issue price. A total of around 1.4 million shares had changed hands on the NSE and BSE. In comparison, the Nifty 50 fell 0.95 percent to 18,941.
“IRM Energy is a relatively new company, but it has a diversified customer portfolio, distribution network and strong customer relationships. Moreover, the company is well positioned to benefit from the growing demand for natural gas in India. Current market conditions may be a reason for such a poor rating. However, current market sentiment is not favorable for the listing, so investors can keep the stop loss at Rs 455 and exit if the stock breaks this level,” said Shivani Nyati, Head of Wealth, Swastika Investmart.
IRM Energy’s Rs 545 crore initial public offering (IPO) had received good response from investors, with the issye being oversubscribed by 27 times. The non-institutional investor category was subscribed 48.34 times, while the Qualified Institutional Buyers (QIBs) portion was subscribed 44.73 times and the Retail Individual Investors (RIIs) quota was subscribed 9.29 times .
IRM Energy supplies piped natural gas and compressed natural gas. It has operations in many states including Gujarat, Punjab and Tamil Nadu.
The proceeds of the issue worth Rs 307.26 crore will be used to fund capital expenditure for development of city gas distribution network in Namakkal and Tiruchirappalli in Tamil Nadu and Rs 135 crore for debt servicing.
Although still in its early stages, IRM Energy has a diversified customer portfolio, distribution network and strong customer relationships. The company has achieved revenue growth of 88 per cent CAGR during FY20-23, with volume growth of 63 per cent, while other listed players in the sector have achieved volume growth of ~3-4 per cent on average in FY20-23.
Analysts at Nirmal Bang Securities are positive about the company’s multiple growth compared to other players as it aims to grow its volume by a factor of three over the next four years, for example from 0.54 MMSCMD in FY23 to 1.51 MMSCMD in FY27E, due to the different options available. to stimulate demand in existing geographic areas (GAs).
Their successful corporate track record of building and operating distribution systems and their diverse customer portfolio are strengths. Furthermore, the company’s strong pedigree and experienced leadership, along with their emphasis on technology adoption, enhance their growth potential. Moreover, their strategic acquisitions of GAs with gas pipeline connectivity and consistent financial performance provide a stable foundation for expansion, said analysts at Anand Rathi Shares and Stock Brokers.