The category for non-institutional investors (NII) was subscribed to the most, 33.47 times, followed by the portion reserved for retail investors, which saw offers at 20.24 times. Meanwhile, the quota of qualified institutional buyers (QIBs) was subscribed 3.35 times.
GMP: The company’s shares in the gray market are trading at a healthy premium of ₹76, indicating a 45 percent premium at listing.
However, it should be noted that the gray market premium is only an indicator of how the company’s shares perform in the unlisted market and can change quickly.
About the IPO
The ₹501 crore IPO of Gandhar Oil opened for subscription on November 22 and will close on November 24. The price band for the offer was set at ₹160-169 per share. Bidder will be able to apply in lots and one lot of the IPO consists of 88 company shares. Minimum amount required for a retail investor to apply for the IPO is ₹14,872 ( ₹169 x 88).
Gandhar Oil is a producer of white oils serving the consumer and healthcare end industries. The company offers a wide range of more than 350 products, which mainly fall under three categories – personal care, treatment and performance oils (PHPO), lubricants, and process and insulating oils (PIO) – under the brand name “Divyol”.
The issue consists of a fresh share sale value ₹302 crore and offer for sale (OFS) from existing promoters and shareholders for 1,17,56,910 equity shares aggregating up to ₹200 crores. Income from the issue will be used for the payment of debt and for the purchase of equipment and civil work necessary for the expansion of the capacity of automotive oil at the Silvassa plant.
The company raised ₹150.2 crore through its anchor book including Morgan Stanley, Societe Generale, Copthall Mauritius Investment, Whiteoak Capital, Ashoka India Equity Investment Trust, Turnaround Opportunities Fund and other mutual funds and insurance companies. It allotted 88,88,018 equity shares to anchor investors at ₹169 per equity share.
The IPO reserved no more than 50 percent of the shares in the public issue for QIB, no less than 15 percent for NII, and no less than 35 percent of the offer is reserved for retail investors.
Nuvama Wealth Management and ICICI Securities are the book-running lead managers of the Gandhar Oil Refinery India IPO, while LinkIntime India is the registrar for the issue. The company’s equity shares will be listed on both exchanges on December 5, according to the IPO schedule.
Should you subscribe?
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The issue has a P/BV price of 1.67 based on its NAV of ₹101.35 on June 30, 2023, and is asking a PE multiple of 7.11 times at the upper end of the price band and uses diluted EPS for FY23 and a PE of 7.54 times annualized diluted EPS for Q1FY24. Looking at all the factors, risks, opportunities and attractive valuation, the cash-rich investors can bid for the issue with a medium to long-term view, it said.
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In general, healthy financial performance, expansion of product portfolio, improvement of return ratios, and growing foreign trade are key growth engines for the company’s performance in the long term. The issue is valued at a P/E of 7.1 times on the upper price band based on FY23 earnings, which is fairly valued, StoxBox said with a ‘subscribe’ rating for the issue.
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Gandhar Oil Refinery is a leading producer of white oils by revenue with a growing focus on the consumer and health end industries. Until June 30, 2023, the product line mainly consisted of more than 440 products. The company’s products are used as ingredients by leading Indian and global companies for manufacturing end products for the various sectors, it said.
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“We have a subscription valuation on the back of 1) A leading market share of the Indian white oils market with significant overseas sales, focused on the consumer and health end industries; 2) A broad and diversified customer base and supplier base consisting of leading oil companies with competitive pricing ; 3) Strategically located manufacturing facilities and in-house R&D capabilities; 4) A robust, flexible and scalable business model with a prudent risk management framework; and 5) A track record of consistent financial performance,” Elekto said.
Disclaimer: The opinions and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.
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Updated: 24 Nov 2023, 11:23 IST
(tagsTo Translate)Gandhar Oil Refinery India IPO