SENSEX
NIFTY 50
Hang Seng
Taiwan Weighted
MCX GOLD DEC 05
MCX SILVER DEC 05
USD/INR
EUR/INR80.0630

SENSEX
NIFTY 50
NIFTY MIDCAP 100
S&P BSE MIDCAP
Hang Seng
Taiwan Weighted
DAX
Nasdaq
MCX GOLD DEC 05
MCX SILVER DEC 05
MCX CRUDEOIL NOV 16
MCX NATURALGAS OCT 26
USD/INR
EUR/INR
GBP/INR
JPY/INR

Stock Market Live: Sensex off day's low; Nifty above 14,600; banks, financials drag

Asian stocks slip as global rally skids on inflation fears

Oil prices slip on surprise build in US crude stocks

Rupee tanks 67 paise to 73.10 against US dollar in early trade

Heranba Industries IPO opens for subscription today: Should you invest?

Updated : February 23, 2021 01:06 PM IST

The company has a strong 19.5 percent market share in the pyrethroids market and caters to over 60 countries.

This is the seventh IPO to hit Dalal Street this year so far and the issue will close on February 25.

The Rs 625 crore-initial public offering (IPO) of Gujarat-based agrichemicals manufacturer Heranba Industries opened for subscription on Tuesday at a price band of Rs 626-627 per share. This is the seventh IPO to hit Dalal Street this year so far and the issue will close on February 25.

The Heranba Industries' IPO comprises an offer-for-sale (OFS) of up to 90.15 lakh equity shares and a fresh issue of Rs 60 crore shares. The net fresh issue proceeds will be utilised for working capital requirements.

Read here: Heranba Industries IPO to open on Tuesday: Key things to know before you subscribe

Heranba Industries is a crop protection chemical manufacturer and is one of the leading domestic producers of synthetic pyrethroids like cypermethrin, deltamethrin, lambda-cyhalothrin etc.

The company has a strong 19.5 percent market share in the pyrethroids market and caters to over 60 countries. As of FY20, 49 percent of its revenues came from the overseas markets which enabled Heranba to sail through the ups and downs locally.

Brokerages have assigned a ‘sSubscribe’ rating to the issue for listing gains and also for the long term, given the company's dominant position in pyrethroids market, better return ratios than peers, reasonable valuations to peers, increasing export opportunity and strong balance sheet with low long term debt.

“The company faces high risk due to shoot up in raw material prices which forms a whopping 70 percent of its expenses. Moreover, it faces high competition risk from peers such as Rallis India, Bharat Rasayan and Sumimoto Chemical. But despite these risks, Heranba continues to capture a dominant position with sound fundamentals and diversification capabilities,” said Nirali Shah, Head- Equity Research, Samco Securities.

Shah recommends investors to subscribe to this IPO for listing gains. However, investors should also be cautious about the prevailing market sentiment and their own liquidity before aggressively subscribing to all IPOs, she said.

Read here: Heranba Industries Rs 625 crore IPO to open on February 23; Check details here

ICICI Direct recommended to subscribe to the issue and said that at Rs 627, the stock is available at 25.7x FY20.

“Benefiting from being an integrated pyrethroids manufacturer with a strong product pipeline, geographical expansion coupled with favourable macro factors are likely to drive growth. Apart from this, it has one of the strongest return ratios in Industry and healthy balance sheet,” ICICI Direct said.

Heranba’s revenues have grown at a CAGR of 13 percent from FY18-FY20 whereas its PAT has grown at a CAGR of 44 percent during the same period. It has recorded robust average ROE and ROCE of 31.3 percent and 56 percent respectively for the last three years.

“The company has a robust past track record of performance. In the future, we expect the company to gain market share and improve margins. The company has priced its issue at 22.1x PE on a trailing basis, which is quite reasonable by looking at the future prospects of the Company. Its peers such as Rallis India, Sumitomo Chemicals and Bharat Rasayan are trading at 23.1x, 47.3x and 27.0x PE on a trailing basis respectively," Angel Broking said.

"Company return ratios are superior to peers (return on equity-ROE is above 30 percent). Company has a strong financial position and has been generating positive cash flow. We are positive on the long-term prospects of the company, we recommend subscribing Heranba Industries IPO for long term as well as for listing gains," the brokerage added.

Religare Broking said that the company is trading at a PE of 25x EPS FY20, which is at a discount to the peers.

“We have a positive view on the company for the long term, given its strong product portfolio, wide distribution network, valued customers and healthy growth opportunity in the sector. Investors having a long-term view can subscribe to the issue,” Religare Broking added.

You May Also Like

KVIC's e-market portal achieves Rs 1.12 crore turnover in 8 months

KVIC's e-market portal achieves Rs 1.12 crore turnover in 8 months

Important update for passengers boarding domestic flights from Mumbai airport

Important update for passengers boarding domestic flights from Mumbai airport

Countdown begins for ISRO's first mission in 2021, Brazil's Amazonia-1 on board

Countdown begins for ISRO's first mission in 2021, Brazil's Amazonia-1 on board

Trending on CNBC-TV18

Live TV

recommended for you