IRM Energy closes 6% below issue price on debut day

• The stock listed at ₹479 as compared to its IPO price of ₹505 per share.
• Its market capitalisation is at ₹1,966 crore as per Bombay Stock Exchange.
• Grey market lowered its expectations to 7% listing gains from 15% it had during the subscription period.

The stock of city gas distribution company IRM Energy debuted at a discount of 5% on Thursday morning contrary to expectations of listing gains. The stock listed at ₹479 as compared to its IPO price of ₹505 per share.

Through the day, the stock was impacted by negative sentiment on the stock markets. IRM Energy closed 6.3% below its issue price on its debut day. The benchmark indices were on a free fall with Sensex losing 900 points, and Nifty slipping by 264 points.

Its market capitalisation is at ₹1,966 crore as per Bombay Stock Exchange. The grey market had pegged listing gains to the tune of 7%, as of Thursday morning. The unofficial market where shares are traded before listing, had tempered its expectations from the stock as at the time of subscription it was expecting 15% listing gains.

IRM Energy’s initial public offer was subscribed 27 times over the shares on offer, with good interest from institutional investors.

It is noteworthy that barring Updater Services and Yatra Online, most stocks in recent times have debuted with strong listing gains, with a few exceeding grey market expectations by a large margin as well. However, IRM Energy joined the ranks of a rare few that have missed the mark in recent times.

Here are the listing gains from the last few market debuts.



About IRM Energy

IRM Energy is a city gas distribution company, engaged in the business of laying, building, operating and expanding the city or local natural gas distribution network. It aims to raise as much as ₹545.4 crore at the upper end of the price band.

It has fixed a price band of ₹480-505 per equity share. Investors can bid for a minimum of 29 equity shares and in multiples of 29 equity shares thereafter.

The issue is an entirely fresh issue with no offer for sale portion. It intends to use the net proceeds to fund capex to develop the city gas network in Namakkal and Tiruchirappalli, loan payments and general corporate purposes.

In FY23, the company’s revenues almost doubled to ₹1,039 crore as compared to the year before. Its net profit went up 35 percent to ₹26.9 crore. Some of its listed peers include Gujarat Gas, Indraprastha Gas, Mahanagar Gas and Adani Total Gas.

Its dependence on third parties to source and transport gas, the hazardous nature of the business and the many licences involved in the business have been quoted as risk factors in the DRHP.

“IRM Energy IPO offers investors an opportunity to invest in a growing and emerging player in the city gas distribution segment., backed by Cadila Pharmaceuticals. Exclusive CNG and PNG rights, expansion plans, and a diverse customer base drive operational efficiency. IRMEL's vertical integration into renewables and strategic investments show foresight,” said Prashanth Tapse, senior VP of research at Mehta Equities who recommends investors to subscribe it for the long-term.

However, Choice Broking said that at the higher end of its price band, its price to earnings multiple is at a premium to its adjusted peer average. “The issue seems to be fully priced considering its subdued profitability and return ratios. We assign a ‘subscribe with caution’ rating for the issue, it added.