Heranba Industries Ltd. IPO

Issue Details:

Price Band: 626-627

Cutoff Price: 627

About Company

Heranba Industries Ltd is a crop protection chemical manufacturer, exporter and marketing company based out of Vapi, Gujarat. It manufacture Intermediates, Technicals and Formulations. They are one of the leading domestic producers of synthetic pyrethroids like cypermethrin, alphacypermethrin, deltamethrin, permitherin, lambda cyhalothrin, etc. Their Pesticides range includes insecticides, herbicides, fungicides and public health products for pest control.

Business verticals includes:

1. Domestic Institutional sales of Technicals: manufacturing and selling of Technicals in bulk to domestic companies

2. Technicals exports: Exports of Technicals in bulk to customers outside India

3. Branded Formulations: Manufacturing and selling of Formulations under our own brands through our own distribution network in India

4. Formulations exports: Export of Formulations in bulk and customer specified packaging outside India

5. Public health: Manufacturing and selling of general insect control chemicals by participating in public health tenders issued by governmental authorities and selling to pest management companies.

Heranba started its manufacturing activity in the year 1996 with production of an Intermediate product CMAC. By the FY 2001-2002, they forward integrated the company into the manufacturing of various Technicals like metametron, cypermethrin, alpha, permethrin and deltamethrin. By the end of the FY 2004-2005, it further expanded their product range to Formulations, which are final products sold to farmers as Pesticides, Herbicides, Fungicides for crop protection and into public health products in the FY 2010-11. Company is present in the entire product value chain of the agrochemicals industry i.e. Intermediates, Technicals and Formulations and holds registrations for 18 Technicals for manufacture and sale in India, 103 Technicals & Formulations for manufacture and sale in the export markets and 169 Formulations registered for manufacturing and sale in India. Applications for registration of 14 Technicals & Formulations for manufacture & sale in India and 7 Technicals and Formulations to manufacture for the export markets have been filed with the CIB&RC and are in the process of evaluation. They diversified their business from manufacturing and selling of Intermediates to manufacturing, marketing and selling of Technicals and Formulations. Majority of the current Intermediates production is utilized for captive consumption for the manufacturing of Technicals Products. Formulations are produced and packaged in powder and liquid forms and sold to distributors for further sales to farmers.

Competitive Strengths:

1. Presence in a wide range of products across the entire value chain of synthetic pyrethroids

2. Product registrations in the domestic and international markets enabling global outreach

3. Strong product portfolio and wide distribution network

4. Diversified and stable customer base

5. Experienced Promoters and Management Team.

Strategies:

1. Enhancing and streamlining production capacities and operations

2. Development of new products at our R&D facility at Unit III (Sarigam Unit)for

3. Entering the highly regulated markets of USA and Europe

4. Enhancing Formulations & Technicals business in the international markets

5. Branded Formulations and Public Health products segment

Financial Performance:

Blue Bar is Revenue, Red Bar is Net Profit and Yellow Bar is Earning Per Share (EPS)

Objects of the Issue:

Company proposes to utilise the Net Proceeds towards funding the following objects:

1. Allow the Selling Shareholders to sell an aggregate 90,15,000 of Equity Shares

2. Fresh Issue: To fund working capital requirements and to fund expenditures towards general corporate purposes.

Peers Comparison:

My view: Price to book value seems to be on higher side compared to its competitors but earning valuation wise IPO price is at par. I would be applying for the IPO because of decent grey market premium. Do visit this blog and the link after 6pm to get updated details on grey market premium and subscription details.

Grey Market Premium:

Subscription Details:

Allotment Status: Link

Listing Status:

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