Heranba Industries IPO price band announced; grey market premium of agro chemical firm surges 32%

The Rs 625-crore Heranba Industries initial public offering (IPO) will open for subscription next week on February 23 and close on February 25, 2021. Ahead of its public issue, agrochemical firm Heranba Industries shares were seen quoting a grey market premium of Rs 200 or 32 per cent over the IPO price of Rs 627 apiece. 

The shares were trading at Rs 827 apiece in grey market on Wednesday. The company will join listed peers such as Rallis India Ltd, Sumitomo Chemical India Ltd, Bharat Rasayan Ltd, and Punjab Chemicals and Crop Protection Ltd. Equity shares are proposed to be listed on BSE and National Stock Exchange. The subscription for anchor investors will open on February 22, 2021.

The Gujarat-based crop protection chemical manufacturer manufactures different types of pesticides including insecticides, fungicides, herbicides, and other pest control products. It is one of the leading domestic producers of synthetic pyrethroids like cypermethrin, bifenthrin, deltamethrin, lambda-cyhalothrin, etc. AR Ramachandran, Co-founder & Trainer, Tips2Trade. said that despite a strong customer base and improving return ratios, Heranba Industries PE is on the higher side as compared to its industry peers. “However, given current positive sentiment in the market, subscribed investors should book part profits on listing gains,” he said.

Price to earnings ratio (P/E) of Rallis India stands at 28.77, Sumitomo Chemical India Ltd at 77.38, Bharat Rasayan Ltd 26.87, and Punjab Chemicals and Crop Protection Ltd at 95.10. Abhay Doshi, Founder, UnlistedArena.com, dealing in Pre-IPO & Unlisted Shares said that at the upper price band at Rs 627, the issue is priced at 19X PE (based on annualised EPS H1FY21) which looks reasonable. The company has been performing well on the financial front, and operating margins are growing consistently. “Given the positives, the issue should garner very good responses from investors which should ensure a good listing. However, there are a lot of options available in listed space with a proven track record,” Doshi said.

Heranba Industries Limited has a presence in the entire product value chain of agrochemical industry i.e. intermediates, technicals and formulations. It operates in five business verticals of domestic institutional sales of technicals, technicals exports, branded formulations, formulations exports and public health products. Heranba Industries Limited has three manufacturing plants in and around Vapi in Gujarat and Corporate office at Mumbai.

Recently, another agrochemical technicals company India Pesticides Ltd had filed a DRHP with Sebi to raise Rs 800 crore through an initial public offering.