Gandhar Oil Refinery IPO: 10 things to know before subscribing to the Rs 500-crore issue

Gandhar Oil refinery IPO will open for subscription on November 22, 2023, and close on November 24, 2023

Gandhar Oil Refinery India's IPO is set to open on November 22. The company plans to raise Rs 500.69 crore through a fresh issue of 1.78 crore shares and an offer-for-sale of 1.17 crore shares. The anchor book will open for a day on November 21.

Here are 10 key things to know before subscribing to the offer:

1) IPO Dates

The IPO will open for subscription on November 22, 2023, and close on November 24, 2023.

2) Price Band

The price band for the issue has been fixed at Rs 160-169 per share.

3) Offer Details

The white oil manufacturing company plans to raise Rs 500.69 crore via IPO. The offer consists of a fresh issue of 1.78 crore shares worth Rs 302 crore and an offer-for-sale of 1.17 crore shares worth Rs 198.69 crore. Promoters Ramesh Babulal Parekh, Kailash Parekh, and Gulab Parekh will sell 22.5 lakh shares each in the OFS. Further, Green Desert Real Estate Brokers, Denver Bldg Mat & Décor TR LLC, and Fleet Line Shipping Services LLC will exit the company by selling the entire shareholding of 30 lakh shares, 10 lakh shares and 10 lakh shares, respectively, in the OFS. The anchor book will open for a day on November 21.

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4) Objectives of Issue

The major part of the net fresh issue proceeds will be used for the working capital requirements of the company, amounting to Rs 185 crore. Further, the debt of Rs 22.71 crore availed by Texol will be repaid via fresh issue proceeds, and Rs 27.73 crore will be spent for the purchase of equipment and civil work required for expansion in the capacity of automotive oil at the Silvassa plant.

5) Lot Size

Investors can bid for a minimum of 88 equity shares and multiples of 88 after that. Hence the minimum investment by retail investors would be Rs 14,080 (88 (Lot size) x 160 (lower price band)). At the upper end, the bidding amount will increase to Rs 14,872.

6) Company Profile

Gandhar Oil makes several products primarily across the personal care, healthcare and performance oils (PHPO), lubricants and process and insulating oils (PIO) divisions under the Divyol brand. The company enjoys long-term relationships with several domestic and global customers including Procter & Gamble, Unilever, Marico, Dabur, Encube, Patanjali Ayurved, Bajaj Consumer Care, Emami and Amrutanjan Healthcare.

7) Financials

The company’s revenue from operations grew 15.13 percent to Rs 4,079.4 crore in FY23 from Rs 3,543.3 crore in FY22. Profit after tax rose 30.3 percent to Rs 213.17 crore from Rs 163.58 crore in the same period. The PHPO was the largest business division contributing 55 percent to the topline in FY23, followed by lubricants with a 25 percent share in the revenue. The rest of the contribution to revenue came from PIO and channel partners.

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8) Lead Managers

The book-running lead managers to the issue are ICICI Securities and Nuvama Wealth Management while Link Intime India is the registrar.

9) Risks

(i) The company sources most of its key raw material, the base oil, from South Korea and the Gulf Co-operation Council region. Any inability to obtain base oil from these countries in the absence of alternative sources may result in delay or cancellation of orders.

(ii) The company obtains a substantial portion of raw materials from a limited number of suppliers and does not have long-term contracts with them.

10) Listing Date

The trading of Gandhar Oil Refinery shares on the bourses will commence with effect from December 5, as per the IPO schedule.