The portion reserved for retail investors has been booked 50 percent.
The initial public offering of agrochemical manufacturer Heranba Industries has been subscribed 85 percent so far on February 23, the first day of bidding. The portion reserved for retail investors has been booked 1.64 times.
The Rs 625-crore public issue has received bids for 58.76 lakh equity shares against offer size of 69.81 lakh shares, the subscription data available on the exchanges showed.
The portion set aside for non-institutional investors has subscribed 9 percent, while qualified institutional buyers have not started bidding for the issue.
The offer size mentioned above excludes anchor book of over 29.90 lakh equity shares. The company mopped up Rs 187.5 crore from anchor investors on February 22, a day before the opening for the issue.
The public issue comprises a fresh issue of Rs 60 crore and an offer for sale of Rs 565.2 crore shares by promoters. The company will utilise net fresh issue proceeds for working capital requirements. The price band for the issue has been fixed at Rs 626-627 per share.
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Mehta Equities believes Heranba IPO gives investors a unique opportunity to invest in a government recognised export house which has a presence across the entire product value chain of the agrochemicals industry. The brokerage is optimistic on overall crop protection business having high entry barriers to entry
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Mehta Equities also believes that an increase in global and domestic food demand would lead to an increase in demand to protect the food produces and Heranba is well placed to reap the benefits.
On the valuations front, at the upper price band (Rs 627), the issue is asking for a market cap of Rs 2,509 crore with PE (annualised FY21) around 18.46x and P/BV stands at around 6x which makes the issue reasonably priced, well below the average industry compared to its listed peers, said the brokerage. Hence, it advises investors to subscribe to the IPO with a medium to long term perspective as markets always rewards a player which has high visibility and growth potential.
“If we also check on few risk aspects like high contingent liabilities of Rs 53.2 crore on the company’s balance sheet which is almost near or equal to the first half of FY20 profits and increasing preference for organic food produce may act as a concern for the growth,” Mehta Equities said.