IPO listed on 26 Oct'23
IRM Energy Ltd
Minimum Investment
₹ 14,645 / 29 shares
Grey market premium
₹ 64 (13% premium)
Issue price
₹ 505
Listing price
₹ 477
% since launch
Listing on
Oct 26, 2023
Our Verdict:
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- IRM Energy has consistently shown upward momentum in both its revenue and profits, except for FY23, which saw margin pressures due to the spike in petroleum and gas prices stemming from the Ukraine-Russia conflict. Nevertheless, with the markets now stabilized and the company's management optimistic about continued growth, prospects look promising.
- At the top end of the price band, the issue seems fairly valued at a P/E multiple of 19x on annualised FY24 earnings. The grey market premium (GMP) for the issue also indicates a premium listing.
- With a rising trend in industries transitioning from coal to natural gas, IRM Energy, backed by its dominant market position, strategic partnerships, and solid financials, seems well poised to capitalize on this shift. Therefore, investors may consider subscribing to the IPO from a long-term perspective.
About the company
Founded in
1 Dec'15
Managing director
-
- IRM Energy Ltd operates as a city gas distribution (CGD) enterprise in India, serving regions such as Gujarat, Punjab, Tamil Nadu, and the Union Territory of Daman and Diu. They specialize in establishing, maintaining, and expanding urban and local natural gas distribution networks.
- The company delivers one of the most secure, eco-friendly, and economically efficient fuels to homes, businesses, and industries, as well as catering to the transportation sector's fuel needs.
- By the end of June 30, 2023, IRM Energy Ltd had catered to 184 industrial clients, 269 commercial entities, and a robust base of 52,454 household customers.
STRENGTHS
- Impressive Financial Performance: From FY21 to FY23, IRM Energy exhibited a notable growth trajectory with a compounded annual growth rate (CAGR) of 121% in Revenue, 28% in EBITDA, and 35% in Net Profit.
- Monopoly in CNG and PNG Distribution: The company stands as the unique distributor of CNG and PNG within its sanctioned territories. Additionally, they've secured exclusive rights for a 25-year span for infrastructure development, which encompasses the installation of pipelines and CNG dispensing stations. This ensures a reliable revenue stream in the foreseeable future.
- Eco-Friendly Initiatives Boosting Demand: The ban imposed by the National Green Tribunal (NGT) on the consumption of environmentally detrimental fuels, particularly in areas like Mandi Gobindgarh and Fatehgarh Sahib, has amplified the demand from the industrial sector. As a result, the company's industrial client base has expanded significantly from 56 in FY21 to 170 by FY23.
RISK FACTORS
- Declining Trend in Return Metrics: There's a notable reduction in the return ratios. The Return on Equity dwindled to 18.2% in FY23 from 52.5% in FY22. Similarly, the Return on Capital Employed decreased to 14.2% from 39% during the same period.
- Rising Debt Concerns: Outstanding loans have consistently risen, moving from Rs 146.6 crore in FY21 to Rs 283.6 crore in FY23, and further escalating to Rs 300.5 crore as of June 30, 2023. Even though Rs 135 crore from the Issue Proceeds will be allocated towards debt reduction, a significant debt amount of Rs 165.5 crore remains.
- Legal and Regulatory Issues: The company's promoters are entangled in 2 criminal litigations, 29 regulatory actions, and 12 significant tax disputes. Any unfavourable resolutions to these issues might affect the company's operational capacity.
- Currency Fluctuation Exposure: Even though the company's gas supply costs are pegged to global USD indices, its revenue is earned in INR. This situation makes the company indirectly vulnerable to the fluctuations in exchange rates.
Issue details
Issue type
Mainstream
Issue size
₹ 545.40 crore
Fresh Issue
₹ 545.40 crore
OFS
₹ -
Price range
₹ 480 - 505
Lot size
29 shares
Issue Objective
Issue proceeds will be utilised towards:
- Funding capex requirements for developing City Gas Distribution networks in Namakkal and Tiruchirappalli (Tamil Nadu);
- Prepayment or repayment of certain outstanding borrowings availed by the company; and
- General corporate purposes.
Dates
Bidding open
18 Oct'23
Bidding close
20 Oct'23
Allotment date
23 Oct'23
Refund date
23 Oct'23
Listing
26 Oct'23
IPO Reservations
Qualified institutional buyers
<50%
Non-institutional investors
>15%
Retail individual investors
>35%
Read the Offer Document
© 2025 by Liquide Solutions Private Limited, SEBI Registered Research Analyst (Registration number - INH000009816)
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