IPO Analysis: Heranba Industries
IPORating- Invest
About the issue
Heranba Industries is a crop protection chemicals manufacturer. It manufactures various types of pesticides including insecticides, herbicides, fungicides, and plant growth products. It is entering the capital market with its initial public offering (IPO) of equity shares of the face value of Rs 10 each. The price band of the issue has been fixed at Rs 626 to Rs 627 per equity share. The total number of shares for sale is 90,15,000. The opening date of the IPO is February 23, 2021 while its closing date is February 25, 2021. Around 50 per cent of the issue will be reserved for qualified institutional buyers (QIB), 15 per cent for non-institutional investors (NII) and the remaining 35 per cent for the retail investors. The objective of the offer is to fund working capital requirements and also, to fund expenditures towards general corporate purposes.
Heranba Industries Ltd
|
|
|
|
Issue open
|
Feb 23, 2021 – Feb 25, 2021
|
|
Issue type
|
Book built issue IPO
|
|
Issue size
|
90,15,000 equity shares of Rs 10
(aggregating up to Rs 625.24 crore)
|
|
Face value
|
Rs 10 per equity share
|
|
Issue price
|
Rs 626-Rs 627 per equity share
|
|
Market lot
|
23 shares
|
|
Min. order quantity
|
23 shares
|
|
Listing at
|
BSE, NSE
|
About the company
Heranba Industries is engaged in the business of manufacturing and marketing of various agrochemicals, which have a pan-India presence. They have integrated operations across research & development (R&D), manufacturing, marketing & distribution of a wide range of crop protection chemicals, public health, and animal health solutions. It covers the pan India market through a strong network of 8,600 dealers and exports to 60 countries. The firm has a long success record of providing innovative agrochemical products to farmers. The company has three fully-integrated modern manufacturing units in Vapi (Gujarat), with an in-house R&D facility, producing various crop protection and public health products. The company has an aggregate manufacturing capacity of 14,024 MTPA. Meanwhile, its business verticals include domestic institutional sales of technical, technical exports, branded formulations, formulations exports, and public health products.
Strengths
The company’s range of product portfolio includes intermediates, formulations, and technical.
It has its presence in a wide range of products across the entire value chain of synthetic pyrethroids.
Other factors include:
Domestic as well as global reach.
Strong product portfolio and wide distribution network.
Experienced promoters and management team.
Diversified and stable customer base.
Financials
|
Figures in Crores
|
FY20
|
FY19
|
FY18
|
FY17
|
FY16
|
|
Total assets
|
540.93
|
434.29
|
344.51
|
260.97
|
259.76
|
|
Sales
|
951.37
|
|
745.1
|
607.82
|
536.75
|
|
Direct expenditure
|
727.16
|
787.25
|
556.57
|
485.59
|
416.28
|
|
Gross profit
|
224.21
|
217.19
|
188.53
|
122.23
|
120.47
|
|
Operating expenditure
|
78.33
|
78.39
|
95.4
|
71.34
|
75.16
|
|
Operating profit
|
145.88
|
138.8
|
93.13
|
50.89
|
45.31
|
|
Other income
|
16.53
|
7.39
|
5.31
|
2.5
|
0.84
|
|
Interest
|
8.84
|
10.73
|
11.81
|
12.37
|
13.43
|
|
Depreciation
|
8.2
|
5.95
|
5.01
|
4
|
4.06
|
|
Profit before tax
|
128.84
|
122.12
|
76.31
|
34.52
|
27.82
|
|
Tax
|
31.09
|
46.72
|
29.43
|
14.2
|
10.94
|
|
Profit after tax
|
97.75
|
75.4
|
46.88
|
20.32
|
16.88
|
|
EPS (unadjusted)
|
25.03
|
19.31
|
60.01
|
26.02
|
21.61
|
Valuation & recommendation
If we look at the peer group of Heranba, then their average P/E ratio is 60.99. If we look at the price band of Heranba Industries and calculate the P/E ratio at the higher price of Rs 627, then we would get a value of P/E ratio of 25.05. This is lower than the industry average. The portfolio of Heranba Industries has many known brands. It is exporting to developed countries with good margins. This offers an opportunity to generate strong revenue in the future. The industry is highly driven by new products on the back of research & development. The range of its business activities, both in the domestic and international markets, offers opportunities to enhance revenue and profitability. The company has a diverse and stable client base that provides the required stability. Heranba Industries has been performing well on the financial front, and its operating margins are growing consistently. The management of Heranba Industries has more than three decades of experience in the agrochemicals sector and is well-qualified to manage the operations of the company. Looking at the above positives, we believe that the company will keep growing its business at a healthy rate, and hence, you can invest.