Gandhar Oil IPO was subscribed 18.25 times on day 3: From GMP to brokerage views, here’s everything you need to know

The IPO of Gandhar Oil Refinery continued to receive strong response from investors. The issue was subscribed 18.25 times on the third offering day, November 24, 2023, at 10:30 a.m. Bids were received for 37.84 crore shares against 2.07 crore shares in the offer.

The non-institutional investor (NII) category was the most subscribed at 33.47 times, followed by the portion reserved for retail investors, which saw bids 20.24 times. Meanwhile, the quota of qualified institutional buyers (QIBs) has been subscribed 3.35 times.

GMP: The company’s shares trade at a healthy premium of ₹76, indicating a 45 percent premium at listing.

However, it is important to note that the gray market premium is merely an indicator of how the company’s shares are performing in the unlisted market and can change quickly.

About the IPO

The ₹Gandhar Oil’s ₹501 crore IPO opened for subscription on November 22 and will close on November 24. The price range for the offer has been set at ₹160-169 per share. A bidder can apply in lots and one lot of the IPO includes 88 shares of the company. The minimum amount that a private investor needs to apply for the IPO is ₹14,872 ( ₹169×88).

Gandhar Oil is a white oil manufacturer serving the consumer and healthcare industries. Under the brand name “Divyol”, the company offers an extensive range of over 350 products, which mainly fall into three categories: personal care, health and performance oils (PHPO), lubricants and process and insulating oils (PIO).

The issue consists of a sale of new shares ₹302 crore and an offer for sale (OFS) from existing promoters and shareholders for 1,17,56,910 equity shares, aggregating up to ₹200 crore. Proceeds from the issue will be used to pay off debts and purchase equipment and construction work necessary to expand automotive oil capacity at the Silvassa plant.

The company has increased ₹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. 88,88,018 shares were allotted to anchor investors ₹169 per share.

Through the IPO, not more than 50 percent of the shares in the public issue are reserved for QIB, not less than 15 percent for NII and not less than 35 percent of the offering is reserved for private investors.

Nuvama Wealth Management and ICICI Securities are the underwriters of the IPO of Gandhar Oil Refinery India while LinkIntime India is the registrar for the issue. The company’s shares will be listed on both exchanges on December 5, as per the IPO schedule.

Should you register?

Sushil Finance: Subscribe

The issue is priced at a P/E ratio of 1.67 based on a net asset value of ₹101.35 as of June 30, 2023 and requires a P/E multiple of 7.11 at the high end of the price band and uses FY23 diluted EPS and a P/E ratio of 7.54 times annualized FY23 diluted EPS 24. Taking into account all factors, risks, opportunities and an attractive valuation, the liquid investors could apply for the issue in the medium to long term, it said.

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Overall, healthy financial performance, expanding the product portfolio, improving return ratios and growing international business are important growth drivers for the company’s long-term performance. The issue is priced at a P/E ratio of 7.1 at the high end based on FY23 earnings, which is fairly valued, StoxBox said with a ‘Subscribe’ rating on the issue.

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Gandhar Oil Refinery is a leading producer of white oils by revenue with a growing focus on the consumer and healthcare end industries. As of June 30, 2023, the product suite primarily comprised over 440 products. The company’s products are used by leading Indian and global companies as ingredients for manufacturing end products for the various sectors, it said.

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“We have a subscriber valuation based on 1) a leading market share in the Indian white oil market with significant overseas sales, focused on the consumer and healthcare end industries; 2) Extensive and diversified customer base and supplier base consisting of leading oil companies with competitive pricing conditions; 3) Strategically located manufacturing facilities and internal R&D capabilities; 4) Resilient, flexible and scalable business model with prudent risk management framework; and 5) track record of consistent financial performance,” Choice said.

Disclaimer: The views and recommendations expressed above are those of individual analysts or brokerage firms and not of Mint. We recommend investors consult certified experts before making an investment decision.

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