IRM Energy IPO Listing: IRM Energy Share Price Debuts At 5.5 Per Cent Discount To IPO Price

IRM Energy is in the business of city gas distribution. The company’s revenue derives from selling both compressed natural gas and piped natural gas in the allotted geographical areas

IRM Energy IPO Listing: The stock began trading at Rs 477.25 on the NSE and Rs 479 on the BSE, lower by 5.5 per cent compared to issue price of Rs 505.

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Gas distribution firm IRM Energy Ltd made a lacklustre debut on the exchanges on Thursday, pulled down by sell-off in the broader markets. The stock began trading at Rs 477.25 on the NSE and Rs 479 on the BSE, lower by 5.5 per cent compared to issue price of Rs 505. Cadila Pharmaceuticals-backed Gujarat-based city gas distribution firm's IPO was subscribed 27.05 times. Retail subscribers subscribed 9.29 times, while non-institutional investors subscribed 48.34 times, and qualified institutional buyers subscribed 44.73 times.

IRM Energy is in the business of city gas distribution (CGD). The company’s revenue derives from selling both compressed natural gas (CNG) and piped natural gas (PNG) in the allotted geographical areas (GAs).

According to analysts, the market selloff on Thursday played spoilsport as the stock was supposed to list at 8-10 per cent premium. While brokerages said that IRM Energy was fairly priced, falling margins in FY23 was a major concern. The profit margin came down to 5.4 per cent in FY23 from 20.8 per cent in FY22, while the EBITDA margin declined to 10 per cent from 31 per cent in the same period.

As per IRM Energy, the fall in margins and rise in debt in FY23 were due to the low allocation of APM and higher non-APM gas prices, owing to the global headwinds and as the company was in the transition phase for enrolling industries in Fatehgarh Sahib, it did not pass on the entire increase in the gas cost to customers to boost conversions and volumes.

Shivani Nyati, head of wealth, Swastika Investmart, believes that IRM Energy is still in the early stages of growth and may be impacted by unforeseen factors and other risks like limited geographic reach, government policies, delayed revenue generation, etc.

IRM Energy provides piped natural gas (PNG) and compressed natural gas (CNG). It has operations in states including Gujarat, Punjab, and Tamil Nadu and serves 184 industrial customers, 269 commercial customers, 52,454 domestic customers, as of June 2023. It has an established network of 69 CNG filling stations, comprising 2 owned and operated by the company, 36 owned and operated by dealers and 31 owned and operated by oil marketing companies.

The company's revenue from operations rose 6.51 per cent to Rs 245.25 crore in April-June 2023 from Rs 230.27 crore in the year-ago period. Besides, profit after tax jumped 31 per cent to Rs 26.91 crore in the quarter from Rs 20.54 crore in the three months ended June 30, 2022.