Heranba Industries to list on Friday; grey market premium indicates strong debut on bourses

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The ongoing rally on Dalal Street coupled with reasonable valuations may help Heranba Industries make a strong debut on bourses on March 5.

“At present, the grey market premium for Heranba industries is Rs 235. It is almost stable for the last couple of days. The premiums were around Rs 100-120 when the IPO was open for subscription on February 23,” said grey-market watcher Abhay Doshi.

He further added that Heranba is reasonably priced, market sentiments are also positive and moreover, chemical stocks are also performing well on D-street which have improved the prospects of a good listing of Heranba Industries.

The initial public offering of Gujarat-based crop protection chemicals manufacturer had received a warm response considering its high return ratios, dominance in the pyrethroids segment and a strong balance sheet with negligible long-term debt.

The offer was subscribed 83.29 times on February 25, the final day of bidding, as it received bids for 58.15 crore equity shares against an offer size of 69.81 lakh equity shares, the subscription data available on the exchanges shows.

The company had fixed a price band of Rs 626-627 for the public offer. The present premium indicates that the company may list with a premium of over 30%.

Most of the brokerage gave subscribe rating to the issue. “At the upper price band of Rs 627, Heranba is available at P/E of 18.9x (annualized basis on FY21E EPS of Rs.33.2) which is reasonable compared to its peers. We assign a “Subscribe” rating for the issue on a long-term basis considering the strong distribution network, increasing export opportunity with healthy margins and profitability,” Geojit Financial Services said.