Gandhar Oil Refinery Buzzes IPOs Listing With 75% Premium; Stock Trades Higher Post-lisitng
Gandhar Oil Refinery India's IPO, paired with premium mainboard listings, kicked off its equity markets rally with a 75 per cent premium at Rs 295.40 against the issue price of Rs 169. It was one of three IPOs scheduled to list on Thursday.
Post listing, the stocks traded at Rs 306, indicating an additional 6 per cent gain. Consequently, the cumulative gains of the stocks stood at 81.04 per cent or Rs 137 higher on the National Stock Exchange (NSE).
"We had assigned a ‘Subscribe’ rating for the IPO, and today this stock got listed on the exchange at a premium of around 75 per cent. At the current market price of Rs 306, it is trading at a price-to-earnings (P/E) multiple of 16.9 times. Considering the growth outlook and profitability margins, currently, the stock is fairly valued. Thus, investors are advised to book profit. Fresh buying is not recommended at these levels,” said Rajnath Yadav, Research Analyst, Choice Broking.
The Rs 500.69 crore IPO opened on November 22, comprising a fresh issue aggregating up to Rs 302 crore and an offer-for-sale (OFS) of up to Rs 198.69 or 11,756,910 equity shares by the selling shareholders like Ramesh Babulal Parekh, Kailash Parekh, Gulab Parekh, and other shareholders. Subsequently, the firm’s 87.50 per cent stake has been diluted to 64.63 per cent after the issue.
“The IPO was subscribed 64.05 times, significantly higher than expected. This strong response from investors could be due to several factors, including the company's strong track record of growth and profitability, its diversified customer portfolio, and its robust distribution network. The company's strong fundamentals, robust demand for the IPO, and a strong listing price suggest that the company is well-positioned for growth in the future. However, investors may consider booking profit in it once,” said Shivani Nyati, Head of Wealth at Swastika Investmart.
The company intends to use the proceeds of the fresh issue for investment in Texol by way of a loan for financing the repayment of a loan facility availed by Texol from the Bank of Baroda.
The proceeds will also be utilised for capital expenditure through the purchase of equipment and civil work required for the expansion in the capacity of automotive oil at the Company’s Silvassa Plant and funding the Company’s working capital requirement as well as general corporate purposes.
Nuvama Wealth Management (formerly known as Edelweiss Securities) and ICICI Securities were the book running lead managers, while Linktime India was the registrar to the issue.
Gandhar Oil is a white oil company that serves the consumer and healthcare industries. As of 30 June, 2022, the firm offers a comprehensive variety of approximately 350 goods under the brand name "Divyol" that largely fall into three categories: personal care, healthcare and performance oils, lubricants, and process and insulating oils (PIO).
The company's products are utilised by Indian and worldwide enterprises as critical ingredients for numerous end products in areas such as consumer goods, healthcare, automotive, industrial, power, tyre, and rubber. The company has served customers in over 100 countries throughout the world. Procter & Gamble (P&G), Unilever, Marico, Dabur, Encube, Patanjali Ayurveda, Bajaj Consumer Care, Emami, and Amrutanjan Healthcare were among the more than 3500 clients handled by the firm.
