The agrochemical company’s IPO includes a fresh issue of Rs 60 crore and the remaining is an offer for sale by existing investors.
Heranba Industries exported its products to more than 60 countries in FY20. Image: Reuters
The initial public offering (IPO) of Heranba Industries opens for subscription today. The Rs 625 crore issue will remain available for subscription till February 25. Ahead of the issue, Heranba Industries has managed to raise Rs 187.5 crore from anchor investors, allotting them 29.90 lakh equity shares. The agrochemical company’s IPO includes a fresh issue of Rs 60 crore and the remaining is an offer for sale by existing investors. Pre-issue, promoters of the company own a 98.8% stake in the company which will be trimmed to 74% post issue. Other shareholders made up just 1.2% prior to the issue, which is expected to increase to 26% post issue.
Largest portion of anchor investment was made by Government Pension Fund Global, buying 5.58 lakh shares. HDFC Trustee Company picked up 12% of the anchor portion of Heranba Industries, followed by Dovetail India Fund and Cohesion MK Best Ideas Sub-trust, both picking up 8% each. Other investors include IDFC Emerging business fund, Ashmore India Opportunities Fund, Morgan Stanley Asia, Societe Generale, IIFL Special Opportunities Fund, Emkay Emerging Stars Fund, among others. 20% of the anchor portion was picked up by IDFC and HDFC Mutual funds through three schemes.
About the issue
Investors can from today bid for the issue in the price band of Rs 626 to 627 per share. The bod lot is of 23 equity shares, making the minimum application size of Rs 14,421. Of the total Rs 625 crore issue size, 50% of the portion is reserved for Qualified Institutional Buyers (QIB), while Retail Investors can place bids for 35% of the issue, and non-institutional investor (NII) can bid for merely 15% of the total issue. The proceeds from the OFS will go to the selling shareholders, while the amount received from the fresh issue of shares will be used for funding working capital requirements and general corporate purposes. The selling shareholders include Sadashiv K Shetty, who is the Promoter, Chairman and Executive Director of the Company, along with Raghuram K. Shetty who is the promoter and Managing Director of the Company.
Heranba Industries is a crop protection chemicals manufacturer, exporter and marketing company. It has over 9400 dealers/distributors across 16 states and 1 Union Territory in India and also exports to over 60 countries across the Middle East, CIS, Asia, South East Asia and Africa. In revenue terms, the exports constituted over 41% of sales. The Company holds registrations of 18 Technicals and 169 Formulations for manufacture and sale in India, 103 Technicals and Formulations for exports.
Should you subscribe?
ICICI Direct has a ‘Subscribe’ rating on the issue saying that the company offers one of the strongest return ratios in the industry and a healthy balance sheet. At the upper price band of Rs 627, Heranba Industries is available at P/E of 18.9x, according to Geojit Financial Services who find the valuation reasonable compared to peers. “We assign a “Subscribe” rating for the issue on a long-term basis considering the strong distribution network, increasing export opportunity with healthy margins and profitability,” analysts at Geojit said.