Heranba Industries shares extended gains after a stellar debut and rallied 50.7 percent to hit an intraday high of Rs 945 before slipping below Rs 900, the opening price on March 5.
The stock listed with a 44 percent premium on exchanges. It remained strong despite consolidation and correction in the market, trading 32.08 percent higher at Rs 828.15 on the BSE at 1245 hours.
Prashanth Tapse, AVP Research at Mehta Equities said the listing premium was justified on the back of reasonable IPO valuations when compared to other listed peers, high entry barriers protecting future business growth and the company being the leading producer of synthetic pyrethroids, with a 19.5 percent market share in India.
"We also believe that an increase in global and domestic food demand would lead to an increase in demand to protect the food produced and Heranba is well placed to reap the benefits," he added.
Investors should either book partial profits or hold shares for a long term, say analysts. "Investors are advised to hold partial quantity & book partial profit on the day of listing if stock quotes more than 40-50 percent premium to issue price," Astha Jain, Senior Research Analyst at Hem Securities told Moneycontrol.
"We are positive on long term aspects of the company as the company being one of the leading domestic producers of synthetic pyrethroids has shown strong financial performance. With its in-house R&D team for product development and improvisation, the company is in process of developing two products of fungicides, two products of herbicides and one product of insecticides for exclusive sale to the European markets," she said.
Gujarat-based Heranba Industries is into manufacturing crop-protecting chemicals . Its pesticides range includes insecticides, herbicides and fungicides.
The company is present in the entire product value chain of the agrochemicals industry. The business verticals include domestic bulk sales of technicals, technicals bulk exports, branded formulations, formulations exports and insect control chemicals.
Heranba has more than 9,400 dealers in India and three manufacturing facilities in and around Vapi in Maharashtra with a capacity of 14,024 MTPA.
"We would advise allotted investors to hold on to the stock considering the long-term story, as the market always rewards a player who has the high growth potential," Tapse told Moneycontrol.
If investors wish to add Heranba, they can buy in the range of Rs 800-850, he said.
"We are optimistic about overall crop protection business engaged in the entire product value chain of the agrochemicals industry ie intermediates, technicals, and formulations. Heranba also stands well to get favourable policy support from government budgetary allocation to drive sustainable business as well as profitable growth in the long term," he said.
Investors should tap this opportunity and hold for a multibagger story for two-three years, Tapse said.
Heranba Industries raised Rs 625 crore through public issue last week, which included a fresh issue of Rs 60 crore and an offer for sale of Rs 565 crore. The company will utilise net fresh issue proceeds for working capital requirements.
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