Gandhar Oil IPO subscribed to 9.24 times on Day 2: From GMP to brokerage views, here's all you need to know

Gandhar Oil Refinery IPO continued to receive a robust response from investors. The issue was subscribed to 9.24 times at 12 noon on the second day of bidding, November 23, 2023. It has received bids for 19.16 crore shares against 2.07 crore shares on offer.

The category for non-institutional investors (NII) was subscribed to the most, 14.5 times, followed by the portion reserved for retail investors, which saw bids at 11.42 times. Meanwhile, the qualified institutional buyers (QIBs) quota was subscribed to 1.5 times.

GMP: The company's shares in the grey market are trading at a healthy premium of ₹73, indicating an over 43 percent premium at listing.

However, one must note that grey market premium is only an indicator of how the company's shares are performing in the unlisted market and can change quickly.

Read here: Gandhar Oil Refinery India IPO: 10 key risk factors you should know

About the IPO

The ₹501 crore IPO of Gandhar Oil opened for subscription on November 22 and will close on November 24. The price band for the offer has been set at ₹160-169 per share. A bidder will be able to apply in lots and one lot of the IPO comprises 88 company shares. Minimum amount required for a retail investor to apply for the IPO is ₹14,872 ( ₹169 x 88).

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'.

The issue comprises of a fresh share sale worth ₹302 crore and an offer for sale (OFS) by existing promoters and shareholders for 1,17,56,910 equity shares aggregating up to ₹200 crore. The net proceeds from the fresh issue shall be utilised towards funding investment in Texol.

Read Here: IPO review: 5 mainboard issues in the fray: Which one should you choose?

The firm has also raised ₹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 ₹169 per equity share.

The IPO has reserved not more than 50% of the shares in the public issue for QIB, not less than 15% for NII, and not less than 35% of the offer is reserved for retail investors.

Nuvama Wealth Management and ICICI Securities are the book-running lead managers of the Gandhar Oil Refinery India IPO, while LinkIntime India is the registrar for the issue. Shares of the company will be listed on both BSE and NSE.

Read here: IREDA IPO: 20 key risks from RHP to consider before subscribing

Should you subscribe?

Ventura Securities: 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. 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 said.

Swastika Investmart: 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. 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, said Swastika Investmart.

Read here: Tata Technologies vs IREDA vs Gandhar Oil Refinery: Which is better?

Choice Broking: Subscribe

“We have a subscribe rating on the back of 1) a Leading market share of the Indian white oils market with significant overseas sales, focused on the consumer and healthcare end-industries; 2) Extensive and diversified customer base and a supplier base comprised of leading oil companies with competitive pricing terms; 3) Strategically located manufacturing facilities and in-house R&D capabilities; 4) Resilient, flexible and scalable business model with prudent risk management framework; and 5) Track record of consistent financial performance,” Choice Broking said.

SMIFS: Subscribe

“The company’s ROE and ROCE were reported at 32.3 percent and 41.2 percent respectively in FY23. The company’s ROE was highest amongst peers in FY23. Strong positioning within the global and domestic white oil space coupled with decent valuations and healthy return ratios along with scope for growth from improving utilisations and capex could result in very healthy topline and bottom-line( nearly 1.5-2x) growth for the company, hence, we recommend to subscribe to the issue,” said SMIFS.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decision.