Heranba Industries IPO opens: Here's what top brokerages recommend

The initial public offering of Heranba Industries hit the capital market on February 23 to raise up to Rs 625 crore. The Gujarat-based crop protection chemicals manufacturer has been fixed the price band at Rs 626-627 per share for the public offer.

Most of the brokerages have given ‘Subscribe’ rating to the issue for long term as well as for listing gains. The funds raised through the IPO will be utilised to finance the company’s working capital requirements and general corporate purposes.

The IPO will close on February 25 and shares of the company will be listed on BSE and NSE. Investors can bid for a minimum of one lot of 23 shares and in multiples thereof, extending up to 13 lots.

Here’s what top brokerages have to say about the Heranba Industries IPO:

Angel Broking: Subscribe
Heranba Industries has a robust past track record of performance. In the future, Angel Broking expects the company to gain market share and improve margins. Heranba has priced its issue at 22.1x PE on a trailing basis, which is quite reasonable by looking at the future prospects of the company. Its peers such as Rallis India, Sumitomo Chemicals and Bharat Rasayan are trading at 23.1x, 47.3x and 27.0x PE on a trailing basis respectively. Company return ratios are superior to peers (ROE is above 30%). The company has a strong financial position and has been generating positive cash flow. Angel Broking expects a good listing for the company.

Geojit Financial Services: Subscribe
At the upper price band of Rs 627, Heranba Industries is available at P/E of 18.9x (annualised basis on FY21E EPS of Rs 33.2) which is reasonable compared to its peers. We assign a “Subscribe” rating for the issue on a long-term basis considering the strong distribution network, increasing export opportunity with healthy margins and profitability.

Anand Rathi Shares and Stock Brokers: Subscribe
Considering the company’s dominant position in pyrethroids market, strong balance sheet, high RoNW of 30.47% as per FY20 financial statements, strong management and reasonable valuations; Anand Rathi gives this IPO a ‘Subscribe’ rating.

Hem Securities: Subscribe
The company is one of the leading domestic producers of synthetic pyrethroids has shown strong financial performance. With its in-house R&D team for product development and improvisation, Heranba is in process of developing two products of fungicides, two products of herbicides and one product of insecticides for exclusive sale to the European markets. Therefore, the company with its current strong fundamentals has bright future prospects.