IRM Energy Makes Stock Market Debut, Lists At 7% Discount; Should You Sell, Hold or Buy?

Shares of city gas distribution company IRM Energy, the IPO of which was open for public subscription between October 18 and October 20, made its stock market debut on Thursday, October 26, at a discount of around 7 per cent at Rs 477.25 apiece. On the BSE, the shares were trading 10.59 per cent lower than its issue prices of Rs 505 in the morning trade.

Shivani Nyati, head (wealth) at Swastika Investmart, said, “IRM Energy, an emerging player in the city gas distribution (CGD) segment, made its stock market debut today at Rs 477.25 per share, a discount of around 7 per cent against its issue price of Rs 505.”

She added that the IPO was well-received by investors, and oversubscribed by 27 times. However, the current market condition could be a reason behind such a poor listing.

IRM Energy is a relatively new company, but it has a diversified customer portfolio, distribution network, and strong customer relationships. Additionally, the company is well-positioned to benefit from the growing demand for natural gas in India.

“However, the current market sentiment is not favourable for its listing. So, investors may keep the stop loss at 455 and exit if the stock breaks this level,” Nyati.

The initial public offering (IPO) of IRM Energy, which was opened for subscription between October 18 and October 20, was subscribed 27.05 times on the last day of subscription, receiving bids for 20,62,70,910 shares against 76,24,800 shares on offer.

The category for non-institutional investors was subscribed 48.34 times while the portion for Qualified Institutional Buyers (QIBs) received 44.73 times subscription and the retail individual investors (RIIs) quota got subscribed 9.29 times. The IPO was a fresh issue of up to 1.08 crore equity shares.

The price range for the offer was Rs 480-505 a share. IRM Energy Ltd raised over Rs 160 crore from anchor investors.

The proceeds from the issue to the tune of Rs 307.26 crore will be used to fund capital expenditure requirements for the development of the city gas distribution network at Namakkal and Tiruchirappalli in Tamil Nadu and Rs 135 crore for payment of debt. Besides, a portion will be used for general corporate purposes.