Heranba Industries is expected to list with hefty double-digit premium on March 5, experts said, citing strong IPO subscription numbers and optimism in the secondary market. The benchmark indices have rallied about 5 percent each this week.
According to experts, the listing premium for the crop protection chemical manufacturer could be more than 40 percent over and above the issue price of Rs 627 per share.
"Looking at the strong HNI & QIB subscription demand, one can expect a bumper listing gain with 40-45 percent plus listing premium (Rs 250-280) on allotment price of Rs 627," Prashanth Tapse, AVP Research at Mehta Equities told Moneycontrol.
"The listing premium is justified on the back of reasonable IPO valuations when compared to other listed peers and leading position in market as producer of synthetic pyrethroids with 19.5 percent market share in India," said Tapse.
"We also believe that an increase in global & 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.
Its shares already traded at a premium of Rs 230-240 in the grey market i.e. 37-38 percent premium (Rs 857-867) over issue price of Rs 627, the data available on the IPO Watch showed on March 3.
Heranba Industries is present in the entire product value chain of the agrochemicals industry i.e. intermediates, technicals and formulations. Majority of their current intermediates production is utilised for captive consumption for the manufacturing of Technicals Products. Formulations are produced and packaged in powder and liquid forms and sold to distributors for further sales to farmers.
The company is one of the leading manufacturers of synthetic pyrethroids in India. Pyrethroids find usage in significant applications across pest protection, environmental health and crop care as well as animal health. In 2019, the company dominated the India pyrethroids market, accounting for a share of 19.5 percent of the total Indian pyrethroids production values.
Astha Jain, Senior Research Analyst at Hem Securities, too, expects Heranba to list at premium of more than 40 percent. "We are positive on long term aspects of company as 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, 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.
As of November last year, its international distribution partners have successfully obtained 371 registrations of their technicals and formulations in 41 countries across Middle East, CIS, Asia, South East Asia and Africa. Its international distribution partners have presently filed 172 registration applications for their technicals and formulations products which are pending before the regulatory authorities in 41 countries.
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