Incorporated in 2017, IRM Energy Limited is one of the leading providers of clean, safe and cost-efficient natural gas and fuels in India. The company majorly caters to audiences belonging to industrial, automobile, commercial and domestic segments.
IRM Energy Private Limited recently filed its DRHP to SEBI to launch an IPO. As SEBI approves the company’s plan to go public, you must go through the DRHP to plan your investment strategy.
Keep reading to know more about the upcoming IRM Energy Private Limited IPO.
Table of Content
About IRM Energy Limited
IRM Energy Limited holds the position of a leading provider of natural gas. It provides the cleanest, safest and budget-friendly fuel for domestic, industrial and commercial purposes. Among its relevant products, this company distributes CNG and PNG for motor vehicles and household purposes respectively.
Compared to regular competitive fuel, this company succeeds in providing a reliable and environmentally friendly alternative fuel to customers. This helps this company cater to and achieve brand loyalty of all the customer segments. Furthermore, this company ensures to secure good health and safety of its employees.
As a city gas distributor, this company operates in cities like Banaskatha, Namakkal, Diu and Gir Somnath, Fatehgarh Sahib and Tiruchirappalli. According to its DRHP, this company has offered services to approximately 168 industrial customers in FY 2022. In the same year, the company’s commercial customers amounted to 202 while it served 18,382 domestic customers.
To date, IRM Energy Limited established around 56 CNG refilling points. Out of these 2 stations are run and operated by a company under the name COCO stations. Furthermore, 30 stations are run by dealers under the name DODO stations and 24 CNG stations are run by Oil Marketing Companies.
The revenue that IRM Energy Limited generates by distributing CNG and PNG varies in different geographical areas. Moreover, to expand its business, the firm has attained ownership in different business segments.
It has invested in Venuka Polymers Private Limited for its polyethylene pipelines, Farm Gas Private Limited Pipelines and Mindra EV Private Limited. This company also plans to enter the booming market of renewable energy providers with its subsidiary, SKI Clean Energy Private Limited.
Coming to finances, the total income of this company witnessed a drastic growth from Rs. 1,661.25 million in 2020 to Rs. 5,491.93 million in 2022. Similarly, the profit after tax deduction also grew from Rs. 210.65 million in FY 2020 to Rs. 1,280.28 million in FY 2022.
About the IPO and Objectives
IRM Energy Private Limited filed its preliminary report with SEBI on December 14, 2022, intending to go public with an IPO. This company plans to raise funds by offering around 10,10,000 equity shares as a fresh issue. As per the DRHP, there will be no offer for sale issued by company shareholders.
Furthermore, the upcoming IRM Energy Limited IPO will be a book-built issue. This means as an investor, you must place bids at par or above the floor price to invest here. The company has set the face value for its upcoming IPO as Rs. 10 for each equity share. Also, these shares are most likely to get listed in BSE or NSE after its launch.
This company plans to use the net proceeds to develop and fund other expenses of the City Gas Distribution network in Namakkal and Tiruchirappalli. It also plans to repay or prepay certain outstanding debts and fund other general corporate purposes.
IPO Details
The company has recently announced the timeline and other important details of the IPO. Check them below:
| Anchor Allocation Date | Tuesday, October 17, 2023 |
| IPO Opening Date | Wednesday, October 18, 2023 |
| IPO Closing Date | Friday, October 20, 2023 |
| Listing Date | Tuesday, October 31, 2023 |
| Lot Size | 29 shares (retail investors) |
| Minimum Investment Amount | Rs. 14,645 (retail investors) |
| Maximum Investment Amount | Rs. 190,385 (retail investors) |
| Price band | Rs. 480 to Rs. 505 per share |
| Fresh Issue Size | 10,800,000 shares aggregating up to Rs. 545.50 crore |
| Total Issue Size | 10,800,000 shares aggregating up to Rs. 545.50 crore |
| QIB Shares Reserved | Up to 50% of the issue |
| NII Shares Reserved | Up to 35% of the issue |
| Retail Shares Reserved | Up to 15% of the issue |
| Employee Shares Reserved | 2.16 lakh equity shares |
| Employee Discount | Rs. 48/share to the issue price |
Also Read: How does an IPO work?
Strengths of IRM Energy Limited
Let’s take a look at the strengths that make IRM Energy Ltd. IPO worth investing in.
- This company is a dominant distributor of CNG and PNG in its respective geographical areas.
- IRM Energy Limited has a diverse customer base and distribution network of PNG and CNG.
- It also focuses on technological advantages and digital steps to achieve efficient workflow.
- The company also hosts strong connectivity to budget-friendly natural gas resources.
Risks Involved
Besides the above strengths, you must keep the following risks in mind when planning your investment strategy for the IRM Energy Ltd. IPO.
- This company highly relies on third parties to ensure an efficient supply of natural gas. Any disruption, delay or failure in timely delivery is harmful to this company’s brand image. A failure can significantly affect the business, operation and cash flow of IRM Energy Limited.
- IRM Energy Private Limited depends on favourable government policies regulating the supply of natural gas. Any change like an increase in costs can affect its business, brand image and finances.
Outlook & Valuation
Regarding financial performance, the company has reported a total income/net profit of Rs. 212.54 Cr./ Rs. 35.13 Cr. (FY21), Rs. 549.19 Cr. / Rs. 113.56 Cr. (FY22), and Rs. 1045.10 Cr. / Rs. 56.45 Cr. (FY23) on a consolidated basis. With a total revenue of Rs. 248.63 Cr., it made a net profit of Rs. 27.84 Cr. during the first quarter of FY24, which concluded on June 30, 2023. The management claims that the rising costs of fuel and other petroleum products in FY23 put pressure on its margins since the conflict between Russia and Ukraine had disrupted international markets. The markets have now steadied, so in the upcoming years, things should get back on track. For the last three fiscals, IEL posted RoCE margins of 19.98% (FY21), 39.01% (FY22), and 14.19% (FY23). The issue is priced at a P/BV of 2.33 based on its NAV of Rs. 216.95 per share (at the upper cap) and at a P/BV of 4.09 based on its NAV of Rs. 123.38 as of June 30, 2023. The asking price is at a P/E of 18.62 if we annualize FY24 earnings and credit it to the company’s fully diluted paid-up capital after the IPO. The problem thus looks to be fully priced. It is a lengthy racing horse with promising futures.
Summary
IRM Energy Limited aims to achieve sustainable development and growth to cater to the growing energy requirements of its customers. The company plans to adopt the latest technologies and premium practices to work towards this goal. Thus, the upcoming IRM Energy Limited IPO will help the company raise funds to execute this plan.
Also Read: IPO investment strategy
Frequently Asked Questions
You can subscribe to the IRM Energy IPO during market opening hours from 18th to 20th October, 2023. Subscriptions are allowed between 10 am and 5 pm during this time.
BOB Capital Markets Limited and HDFC Bank Limited are the Book Running Lead Managers of IRM Energy Limited IPO.
This company is yet to declare the price band for upcoming IRM Energy Ltd. IPO equity shares.
Link Intime India Private Limited is the registrar for the upcoming IRM Energy Limited IPO.
