IRM Energy IPO to open today: Should you subscribe to the Rs 545.4 crore issue?

IRM Energy IPO opens on October 18

IRM Energy’s IPO is all set to open on October 18. The price band of the Rs 545.4 crore public offer has been fixed at Rs 480-505. Most of the analysts have recommended investors to ‘Subscribe’ the issue owing to the company’s diverse customer portfolio, a well-managed distribution network of CNG and PNG, consistent development of its gas distribution business in its key GAs and decent financial performance in the past few years.

Out of Rs 545.4 crore, IRM Energy plans to spend Rs 307.26 crore for the development of the city gas distribution network in Namakkal and Tiruchirappalli in Tamil Nadu. The company will also use the proceeds to pay debt amounting to Rs 135 crore and the remaining funds will be utilised for general corporate purposes. The issue will close on October 20.

Also Read: IRM Energy IPO opens on Oct 18: 10 things to know before you buy into Rs 545.4-cr issue

Should you subscribe to the IPO?

Anand Rathi: Subscribe

Compared with competitive fuels, IRM Energy provides a more reliable and environmentally friendly alternative fuel to all their customer segments and hence have been able to tap potential customer segments in the respective Gas, according to analysts at Anand Rathi.

“On the valuation front, we believe that the company is fairly priced. Thus, we recommend a “Subscribe – Long Term” rating for the IPO,” analysts said.

Reliance Securities: Subscribe

As per Reliance Securities, IRM’s diverse customer portfolio and distribution network of CNG and PNG and strong relationships through collaborative efforts with a diverse customer base including industrial, commercial and domestic customers ensure an efficient and optimal business mix going ahead.

“With the consistent growth in volumes of its key GA, new business from Tamil Nadu which is a key market going forward we recommend a SUBSCRIBE to the issue for the long term,” analysts at Reliance Securities said.

Swastika Investmart: Subscribe

According to Shivani Nyati, Head of Wealth, Swastika Investmart, IRM  reported strong financial performance in the last few years, except in FY23, when profit was impacted by a rise in gas prices due to geopolitical situations. The company is still in the early stages of growth and may be impacted by unforeseen factors and other risks like limited geographic reach, government policies, delayed revenue generation, etc.

“The issue is coming at a P/E valuation of 24.12x, which appears fairly priced. Thus, considering all these factors and the positive growth outlook, we will recommend a Subscribe rating to this IPO,” Nyati said.

Mehta Equities: Subscribe

“At Rs 505 per share, the IPO values IRMEL at Rs 2072 Cr with a P/E of 19.26x, similar to peers. With industries shifting to natural gas, IRMEL's market presence and strategy make it poised for success. We recommend "SUBSCRIBE" for long-term investors” said Prashanth Tapse, Senior VP (Research), Mehta Equities Ltd.

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