Gujarat based agrochemical company Heranba Industries (Heranba) has opened its Rs 6,250 million initial public offering for subscription on Tuesday, Feb 23, 2021 with a price band of Rs 626-627 per share. The IPO closes on Thursday, February 25, 2021.The IPO consists of a fresh issue of Rs 600 million, an offer for sale of 90,15,000 equity shares by promoters. Investors can bid for a minimum of 23 equity shares and in multiples of 23 shares thereafter. The net fresh issue proceeds will be utilised for working capital requirements.
"We advise investors to 'Subscribe' Heranba Industries IPO with medium to long term perspective as markets always rewards a player who has high visibility and growth potential," opined Prashanth Tapse, AVP-Head Research, Mehta Equities.
"We believe Heranba IPO gives investors a unique opportunity to invest in govt recognized export house which is present in the entire product value chain of the agrochemicals industry i.e. Intermediates, Technicals, and Formulations. We are optimistic on overall crop protection business having high entry barriers protecting business competitions wherein Heranba ranks No 1 in producing synthetic pyrethroids with 19.5% market share in India. Heranba also stands well to get favourable policy support from focused govt budgetary allocation to drive sustainable business as well as profitable growth in the medium to long term," he added.
Tapse further said, "Considering its competitive strength like the wide range of the product portfolio with entire value chain supported by high product registrations, high export business (Contributing almost 50% of the topline) and strong pan India dealership network adds a catalyst to future business growth. We also believe that an increase in global & domestic food demand would lead to an increase in demand to protect the food produces and Heranba is well placed to reap the benefits. If we also check on few risk aspects like high contingent liabilities of Rs 532 million on the company’s balance sheet which is almost near or equal to H1FY20 profits and increasing preference for organic food produce may act as a concern for the growth."
"On valuations parse at upper price band (Rs 627/-), the issue is asking for a market cap of Rs 25,090 million with PE (annualised FY21) ~18.46x and P/BV stands at ~6x which seems the issue is reasonably priced well below the average industry when compared to its listed peers and assume there is something is left on the table for new investors. Hence, based on all the above aspects we advise investors to 'SUBSCRIBE' Heranba Industries IPO with medium to long term perspective as markets always rewards a player who has high visibility and growth potential," Tapse recommended.
Heranba Industries (Heranba) is a Vapi, Gujarat based company incorporated in1992. It is mainly into crop protection biz manufacturing chemicals, marketing and exporter of it. They manufacture Intermediates, Technicals and Formulations. In domestic space it is one of the leading producers of synthetic pyrethroids like cypermethrin, alphacypermethrin, deltamethrin, permitherin, lambda cyhalothrin etc. Their Pesticides range includes insecticides, herbicides, fungicides and public health products for pest control.
Heranba has more than 9,400 dealers/distributors supported by their 21 stock depots spread across 16 states and 1 union territory in the country in order to meet the demand of their products from farmers. As of Nov. 15, 2020, their International Distribution Partners have successfully obtained 371 registrations of their Technicals and Formulations in 41 countries across Middle East, CIS, Asia, South East Asia and Africa.
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