Traders dealing in the unlisted shares said the grey market premium (GMP) of the agrochemical company stood at Rs 255 as of Tuesday. In percentage terms, that translates into 41 per cent premium over the issue price.
“Last week, when the market fell, the GMP went down till Rs 100, but as the secondary market gained momentum, so did Heranba. The stock valuation is also reasonable,” said Abhay Doshi, a trader who tracks the unofficial market for unlisted shares.
Before the bidding for the IPO began, the premium stood around Rs 200. The grey market premium tends to reflect indicative listing gains. Shares of Heranba Industries are expected to be listed on March 5.
The Gujarat-based company had set the IPO price band in the Rs 626-627 range. The Rs 625 crore issue was subscribed to a staggering 83.3 times its issue size on the final day of the bidding process.
The over-subscription was led by qualified institutional buyers, whose allotted shares were subscribed to 67.4 times by the close of the bidding process. The initial public offering also saw good interest from retail investors as their quota was subscribed 11.84 times.
The issue as a whole comprised fresh issue of shares worth up to Rs 60 crore and an offer for sale (OFS) of up to 9,015,000 equity shares. The company raised Rs 187.51 crore from anchor investors.
Prabhudas Lilladher in a note said the IPO is a proxy play on the Indian agrochemical growth story. The issue has been priced reasonably compared with its listed peers.
trades at 16.3 times FY23 EPS of Rs 16.10 while Astec Lifesciences trades at 18.7 times FY23 consensus EPS of Rs 56.4. At the price band of Rs 626-627, Heranba is seeking a valuation of 17.5 times FY23 EPS of Rs 35.80, which is the median valuation of comparable peers, Prabhudas Lilladher said.
Heranba is one of the leading domestic producers of pyrethroids with a 19.6 per cent market share. Pyrethroids accounted for 68 per cent of the company’s revenues in FY20.
Sustained growth of rural India, even during the pandemic, has lifted hopes of companies that cater to that segment of the economy. Heranba Industries is also one of the beneficiaries of that.
