IRM Energy lists at 5% discount amid market selloff; Should you buy, sell or hold the stock?

IRM Energy is an emerging player in the city gas distribution (CGD) segment

IRM Energy made a disappointing debut on October 26 with its shares listing at a 5 percent discount at Rs 477.25 on the NSE and Rs 479 on the BSE, against the IPO price of Rs 505. The stock extended losses and was trading at Rs 466 on the NSE by 11 am.

Ahead of the listing, analysts expected the company to open at a premium of around 10 percent, considering that the Rs 545 crore IPO received a decent overall subscription of around 27x. However, the market selloff put a damper on things.

Also Read | IRM Energy lists at Rs 477, over 5% discount to IPO price

According to Shivani Nyati, Head of Wealth, Swastika Investmart Ltd, the current market condition could be a reason behind such a poor listing. She advised investors to keep the stop loss at 455 and exit if the stock breaks below this level.

IRM Energy is an emerging player in the city gas distribution (CGD) segment, and it has a diversified customer portfolio, distribution network, and strong customer relationships. Additionally, the company is well-positioned to benefit from the growing demand for natural gas in India, Nyati added.

The company benefits from its strong parentage of Cadila Pharmaceuticals Ltd. (49.5 percent stake) which has aided the business in overcoming certain entry barriers such as the requirement of large investments in this sector, according to Anushi Vakharia, Research Analyst, StoxBox.

"Favourable regulations supporting the increased adoption of PNG and the business effectively expanding its presence in newer geographical areas through a higher focus on technology adds to our confidence," she said.

Vakharia further said that on the valuation side, the issue is valued reasonably at a P/E of 24.1x based on FY2023 earnings, compared to the average industry P/E of 43.9x. "Thus, we advise investors who have received allotment to remain invested in the company from a long-term perspective," the research analyst added.