IRM Energy IPO Review: A Lucrative Investment Opportunity

IRM Energy IPO Review: The IPO market in India continues to buzz with excitement, and one of the latest offerings that has caught the attention of investors is the IRM Energy IPO. This article provides a detailed review of the IRM Energy IPO, offering insights into its key details, strengths, and potential risks, allowing potential investors to make informed decisions.

See Also: IRM Energy IPO GMP

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IRM Energy IPO Details

Before delving into the analysis, let’s take a look at the essential details of the IRM Energy IPO:

ParameterDetails
Bidding Dates18 Oct ’23 – 20 Oct ’23
Minimum Investment₹13,920
Lot Size29
Price Range₹480 – ₹505
Issue Size₹545.40 Crores

IRM Energy IPO Application Details

Investors have the option to apply for the IRM Energy IPO in different categories based on their financial capacity. Here are the application details:

Investor CategoryPrice BandApply Up To
Regular₹480 – ₹505₹2 Lakh
High Networth Individual (HNI)₹480 – ₹505₹2 – 5 Lakh

For the IRM Energy IPO, eligible investors can apply as Regular.

See Also: Upcoming IPO in India

IRM Energy IPO Review

IRM Energy’s Growth Potential

IRM Energy operates as a city gas distribution company, with a strong presence in various regions, including Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath (Union Territory of Daman and Diu/Gujarat), and Namakkal & Tiruchirappalli (Tamil Nadu). The company’s key geographical areas (GA) are lucrative and relatively underpenetrated, and it is expected to experience substantial volume growth, projecting an increase from the current FY23 volume of 0.54 mmscmd to 1.51 mmscmd.

The Indian government’s emphasis on transitioning to a gas-based economy, the development of a natural gas grid connecting major demand and supply centers, and increasing the natural gas share in the energy mix to 15% by FY2030 from 6.3% in FY23 bodes well for IRM Energy’s long-term prospects.

Diverse Customer Portfolio

IRM Energy boasts a diverse customer portfolio and a robust distribution network for Compressed Natural Gas (CNG) and Piped Natural Gas (PNG). Its strong relationships with a wide range of customers, including industrial, commercial, and domestic sectors, ensure an efficient and optimal business mix. The consistent growth in volumes of its key GAs and the addition of new business from Tamil Nadu, a significant market, make it an attractive investment opportunity.

Highlights of the IRM Energy IPO

  • The IPO is offered by the Cadila group, a well-established pharmaceutical company in India.
  • The company operates in a sector with high growth potential.
  • It faces limited competition in its geographical areas.
  • The IPO size is relatively small.
  • The estimated listing price of IRM Energy shares was indicated at ₹575 apiece, which is 13.86% higher than the IPO price of ₹505.
IRM Energy IPO Review

IRM Energy IPO Strengths & Risks

Strengths:

  • IRM Energy received the ‘City Gas Distribution – Growing Company of the Year 2020’ award from the Federation of Indian Petroleum Industries (FIPI).

Risks:

  • The company relies on third-party suppliers for sourcing and transporting natural gas, with seven suppliers accounting for 100% of their total purchases as of June 30, 2023. Any disruption or delays in the supply chain from these suppliers could significantly impact their ability to provide natural gas, potentially harming their business.

Read More IRM Energy IPO Strengths and Risks

About IRM Energy

IRM Energy operates as a city gas distribution company in India. Its primary focus is establishing, constructing, managing, and extending natural gas distribution networks within urban and local areas. These networks serve various customers, including industrial, commercial, residential, and automotive sectors. IRM Energy serves two main categories of customers:

  1. CNG (Compressed Natural Gas): Operators of public transport vehicles, private vehicles, and heavy goods vehicles.
  2. PNG (Piped Natural Gas): Divided into industrial, commercial, and domestic segments, primarily used for cooking purposes.

Parent Organization: IRM Energy Limited
Founded: 2015
Managing Director: Mr. Karan Kaushal

In conclusion, the IRM Energy IPO appears to be a promising investment opportunity, with strong growth potential in the city gas distribution sector. However, as with any investment, there are risks involved, and potential investors should conduct thorough research and consult with experts before making any decisions.

IRM Energy IPO Review Today?

Positives:

  • The company is promoted by Cadila Pharmaceuticals, a leading pharmaceutical company in India.
  • IRM Energy is an emerging player in the city gas distribution (CGD) segment, which has a high growth potential.
  • The company has a strong track record of profitability.
  • The IPO is priced attractively, at a P/E of 18.62 based on annualized FY24 earnings.

Negatives:

  • The company has a small market share in the CGD segment.
  • The company’s margins were under pressure in FY23 due to rising gas prices.
  • The company has a high debt-to-equity ratio.

IRM Energy IPO good or bad?

IRM Energy IPO is a good investment opportunity for investors with a long-term horizon. The company is well-positioned to benefit from the growth of the city gas distribution (CGD) sector in India. However, investors should be aware of the risks involved, such as the company’s small market share and high debt-to-equity ratio.

IRM Energy IPO apply or not?

Whether or not to apply for IRM Energy IPO depends on your individual investment goals and risk tolerance.

If you are a long-term investor who is willing to take on some risk, then IRM Energy IPO may be a good investment opportunity for you. The company is well-positioned to benefit from the growth of the CGD sector in India, and the IPO is priced attractively.

However, if you are a risk-averse investor or have a short-term investment horizon, then you may want to avoid IRM Energy IPO. The company has a small market share and a high debt-to-equity ratio. Additionally, the company’s margins were under pressure in FY23 due to rising gas prices.

Please note that this is not a financial advice and you should do your own research before investing.

IRM Energy IPO buy or not?

Whether or not to buy IRM Energy IPO depends on your individual investment goals and risk tolerance.

If you are a long-term investor who is willing to take on some risk, then IRM Energy IPO may be a good investment opportunity for you. The company is well-positioned to benefit from the growth of the city gas distribution (CGD) sector in India, and the IPO is priced attractively.

However, if you are a risk-averse investor or have a short-term investment horizon, then you may want to avoid IRM Energy IPO. The company has a small market share and a high debt-to-equity ratio. Additionally, the company’s margins were under pressure in FY23 due to rising gas prices.

Overall, IRM Energy IPO is a good investment opportunity for investors with a long-term horizon who are willing to take on some risk.

Here are some things to consider before buying IRM Energy IPO:

  • The company’s financials: IRM Energy has a strong track record of profitability, with revenue and profit growing steadily over the past few years. However, the company’s margins were under pressure in FY23 due to rising gas prices.
  • The company’s market share: IRM Energy has a small market share in the CGD segment, which is dominated by a few large players. However, the company is well-positioned to gain market share in the coming years, as the government is expanding the CGD network in India.
  • The company’s growth prospects: The CGD sector in India is expected to grow rapidly in the coming years, as the government is promoting the use of natural gas as a clean and efficient fuel. IRM Energy is well-positioned to benefit from this growth, as it has a strong track record of execution and is backed by experienced promoters.
  • The IPO valuation: The IPO is priced attractively, at a P/E of 18.62 based on annualized FY24 earnings. This is lower than the P/E of many other CGD companies.

Recommendation:

Buy for the long term.

Please note that this is not a financial advice and you should do your own research before investing.

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