The Rs 500.69 crore-initial public offering (IPO) of Gandhar Oil Refinery India opens for bidding on Wednesday, November 22. The company will be selling its shares in the range of Rs 160-169 apiece with a lot size of 88 shares. The three-day bidding for the issue will conclude on Friday, November 24.
Gandhar Oil is a manufacturer of white oils that caters to the consumer and healthcare end-industries. The company offers an extensive range of over 350 products that primarily fall under three categories – personal care, healthcare and performance oils (PHPO), lubricants, and process and insulating oils (PIO) – under the brand name ‘Divyol’.
Of the block, Gandhar Oil is looking to raise 302 crore via fresh share sale, while its promoters and other selling shareholders will offload up to 1,17,56,910 equity shares via offer-for-sale (OFS) route.
The net proceeds from the fresh issue shall be utilized towards funding investment in Texol by way of a loan for financing the repayment/pre-payment of a loan facility availed by Texol from the Bank of Baroda; capital expenditure; funding working capital requirements of the Company; and general corporate purposes.
Gandhar Oil Refinery mobilised Rs 150.2 crore through its anchor book including Morgan Stanley, Societe Generale, Copthall Mauritius Investment, Whiteoak Capital, Ashoka India Equity Investment Trust, Turnaround Opportunities Fund and other mutual funds and insurance companies. It allocated 88,88,018 equity shares to anchor investors at Rs 169 per equity share.
It has products that serve as crucial ingredients for various end products in sectors such as consumer goods, healthcare, automotive, industrial, power, tyre, and rubber, and are used by leading Indian and global companies. The company caters to more than 100 countries across the globe, having served more than 3500 clients.
The company has reserved 50 per cent of the offer for the qualified institutional bidders (QIBs), while non-institutional investors (NIIs) will have 15 per cent shares reserved for them. Retail investors will get the remaining 35 per cent of shares allocated towards them.
Nuvama Wealth Management and ICICI Securities are the book running lead managers of the Gandhar Oil Refinery India IPO, while Link Intime India is the registrar for the issue. Shares of the company will be listed on both BSE and NSE. Here’s what brokerage firms say about the IPO of Gandhar Oil:
StoxBox by BP Equities
Rating: Subscribe
Overall, healthy financial performance, expansion of product portfolio, improvement of return ratios, and growing overseas business are key growth drivers for the company’s performance in the long term. The issue is valued at a P/E of 7.1 times on the upper price band based on FY23 earnings, which is fairly valued, said StoxBox with a ‘subscribe’ rating for the issue.
Ventura Securities
Rating: Subscribe
Gandhar Oil Refinery is a leading manufacturer of white oils by revenue with a growing focus on the consumer and healthcare end-industries. As of June 30, 2023, the product suite comprised over 440 products primarily. The company’s products are used as ingredients by leading Indian and global companies for the manufacture of end products for the various sectors, said Ventura.
“The segment in the specialty oils sector and the company is India’s largest manufacturer of 204 white oils by revenue in FY23, including domestic and overseas sales and is one of the top five players globally in terms of market share in the CY22,” it added with a subscribe rating.
Sushil Finance
Rating: May Subscribe
The issue is priced at a P/BV of 1.67 based on its NAV of Rs 101.35 as of June 30, 2023 and is asking for a PE multiple of 7.11 times on the upper end of the price band and using diluted EPS for FY23 and a PE of 7.54 times annualizing diluted EPS for Q1FY24, said Sushil Finance. “Looking at all the factors, risks, opportunities and attractive valuation the cash rich investors may apply for the issue with a medium to long-term view,” it said.
Swastika Investmart
Rating: Subscribe
As a top producer of white oils, Gandhar Oil Refinery India Limited’s goods are marketed in more than 100 countries worldwide and are used as ingredients by prestigious Indian and international businesses. The consumer and healthcare industries are also top priorities for the business, said Swastika Investmart.
“However, this industry is subject to price fluctuations for raw materials and requires high working capital as well. Secondly, it operates in a very competitive market. The issue appears to be fairly priced, with a P/E ratio of 7.10 times. So considering all these factors we will assign a subscribe rating to this IPO,” it added.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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