IRM Energy’s IPO Closes, Oversubscribed and Set for Allotment Next Week By

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IRM Energy Ltd’s ₹545.40-crore ($72.7 million) initial public offering (IPO) closed on Friday, October 20, 2023, after being oversubscribed 4.36 times on the second day of bidding. The company attracted bids for over 3 crore equity shares against the 76 lakh on offer, with subscription rates among non-institutional investors, retail individual investors, and qualified institutional buyers standing at 9.08, 4.36, and 1.18 times respectively.

The offering consisted of 1.08 crore equity shares priced between ₹480 to ₹505 per share and raised over ₹160 crore from anchor investors. These funds are earmarked for capital expenditure in city gas distribution networks in Namakkal and Tiruchirappalli, Tamil Nadu, debt repayment, and other corporate purposes.

Promoters of the IPO include Cadila Pharmaceuticals Limited, Dr. Rajiv Indravadan Modi, and IRM Trust. The company relies on third-party suppliers for its and is involved in developing natural gas distribution projects. As of June 30, 2023, Compressed Natural Gas (CNG) and industrial Piped Natural Gas (PNG) supply operations accounted for nearly all of IRM Energy’s operations.

Despite facing legal challenges involving two criminal litigations, 29 regulatory actions, and 12 material tax litigations, brokerages including SBI Securities issued a “Subscribe” rating due to the company’s long-term growth prospects. However, a decrease in sales could adversely impact the company’s financial condition.

Notably, Directors Maheswar Sahu and Rabindra Nath Nayak have ties to Diamond Power Infrastructure Limited, whose shares were suspended during their tenure. Additionally, Dr. Rajiv Indravadan Modi was on the board of the now-delisted Casil Health Products Limited.

Managed by BoB Capital Markets and HDFC Bank, the company’s shares will be listed on BSE and NSE. The allotment of IRM Energy’s IPO is expected on October 27, 2023. The grey market premium dropped to ₹45 per share, indicating premium trading in the grey market. The estimated listing price of IRM Energy share price is ₹550 apiece.

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