Indian city gas distributor IRM Energy, operating across Gujarat, Punjab, Daman and Diu, and Tamil Nadu, is expecting a 7% gain on its shares at the initial public offering (IPO) debut. The company's shares are anticipated to trade at a premium of Rs 35.
Shivani Nyati from Swastika Investmart noted the IPO's fair pricing, which resulted in a healthy subscription of 27.05 times at close for the fresh equity sale of 1.08 crore shares. This indicates strong investor interest in IRM Energy, driven by the company's positioning in the unlisted market and the robust growth potential of the city gas distribution (CGD) sector.
The CGD sector is projected to witness a compound annual growth rate (CAGR) of 19-20% in natural gas demand between FY22 and FY30. This trend is fueled by an increase in compressed natural gas (CNG)-equipped vehicles and households in IRM's operational areas such as Namakkal and Tiruchirappalli in Tamil Nadu.
According to the company, IPO proceeds will be directed towards developing its city gas distribution network in Namakkal and Tiruchirappalli, repaying debt, and other corporate purposes. Industrial clusters in Mandi Gobindgarh (Fatehgarh Sahib) and Tamil Nadu are being eyed as additional growth avenues.
This comes after IRM reported a 6% revenue growth to Rs 245 crore ($33 million) and a 31% net profit growth to Rs 26.9 crore ($3.6 million) for the three months ended June.
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