Heranba Industries IPO Details Swastika
Heranba-Industries-IPO

Heranba Industries IPO

The Company is engaged in the business of manufacturing and marketing a range of agrochemicals. It has a pan-India presence, with integrated operations across research and development, manufacturing, marketing and distribution of a wide range of crop protection chemicals, public health and Animal Health solutions.

The company manufactures technical products (active ingredients), intermediate products and formulations. Company’s products viz Deltamethrin and Alphacypermethrin are now recommended and included in the WHO/FAO specifications. The company has a well-balanced effluent treatment system for the solid, liquid and gaseous effluents and emission generated from the various processes.

Heranba’s major focus is on exports. It exports its products to more than 60 countries including Argentina, Belgium, Egypt, Ghana, Indonesia, Jordan, Malaysia, Nicaragua, Philippines, South Africa, Tunisia, Ukraine, Australia, Brazil, Europe, Hamburg, Iran, Kenya, Mexico, Nigeria, Poland, Turkey, Vietnam, Bangkok, China, France, Zimbabwe, Israel, Korea, Pakistan, Saudi Arabia, Taiwan, Uganda, Thailand, UK, Bangladesh, Colombia, Germany, Hongkong, Istanbul, Kyrgyzstan, New Zealand, Peru, Singapore, Middle East. Domestically it caters to the customers all over India with its extensive dealership, stockist network and skilled field sales force.

Product Portfolio:

The company has divided its product portfolio into the following segments:

    • Insecticides: Insecticides are substances used to kill insects. They include ovicides and larvicides used against insect eggs and larvae, respectively. Insecticides are majorly used in agriculture. The company manufactures the following insecticides: Cypermethrin, Deltamethrin, Alpha Cypermethrin, Acephate, Lambda Cyhalothrin, Permethrin, Profenophos, Temephos, Theta Cypermethrin, Thiamethoxam and Imidacloprid. 
    • Fungicide: Fungicides are biocidal chemical compounds or biological organisms used to kill parasitic fungi or their spores. A fungistatic inhibits their growth. Fungi can cause serious damage to crops, resulting in critical losses of yield, quality and profit. The company manufactures the following Fungicides: Tricyclazole and Hexaconazole.
    • Herbicides: Herbicides also commonly known as weedkillers, are substances used to control unwanted plants while leaving the crop relatively unharmed. Company manufacture the following Herbicide: Glyphosate, Metribuzin & Clodinofop. 

 

  • Intermediates: An intermediate is a molecule that is formed from two or more reactants and then reacts further to give products. Most chemical reactions require more than one step and an intermediate is the product of each step, except for the last one, after which the final products are produced. Company manufacture the following Intermediates: Cypermethric Acid Chloride (CMAC), High CIS CMA, High CIS CMAC, High Trans CMA, High Trans CMAC, Bromobenzenes and Metaphenoxy Benzaldehyde (MPBD).

  Strength of the company:

  • Presence in a wide range of products across the entire value chain of synthetic pyrethroids.
  • Product registrations in the domestic and international markets enabling global outreach. 
  • Strong product portfolio and a wide distribution network. 
  • Diversified and stable customer base.
  • Experienced Promoters and Management Team

Risks Relating to Industry

    • There are outstanding legal proceedings involving Company, Promoters and certain Directors which may adversely affect our business, financial condition and results of operations.
  • Company has not entered into long-term agreements with our customers for purchasing the products nor for the supply of raw materials with our suppliers.

IPO Details:

IPO Date Feb 23, 2021 to Feb 25, 2021
Issue Type Book Built Issue IPO
Issue Size Equity Shares of Rs.10 totalling up to Rs. 625.24 Crore
Fresh Issue Equity Shares of Rs.10 totalling up to Rs. 60 crore
Offer for Sale 90,15,000 Equity Shares of Rs.10 totalling up to Rs  565.24
Face Value Rs.10 per equity share
IPO Price Per Equity Share: Rs. 626-627
Min Order Quantity 23
Listing At BSE, NSE

 

IPO Objective:

  • Offer for Sale: The object of the Offer for Sale is to allow the Selling Shareholders to sell an aggregate 90,15,000 of Equity Shares amounting to Rs. 565.24 Crore subject to finalization of Basis of Allotment held by them. Our Company will not receive any proceeds from the Offer for Sale. 
  • Fresh Issue: The net proceeds of the Fresh Issue, i.e. gross proceeds of the Fresh Issue less the Offer expenses apportioned to our Company (“Net Proceeds”) are proposed to be utilized in the following manner: 
  1. To fund working capital requirements; and 
  2. To fund expenditures towards general corporate purposes.

 

Financial Performance:

Financial Performance (in INR crore)
  FY2018 FY2019 FY2020 H1 FY2021
Revenue 750.4 1011.8 967.9 619.2
Expenses 674.1 889.7 839.1 529.1
Net income 47.0 75.6 97.4 66.3
Net margin (%) 6.3 7.5 10.1 10.7

 

Tentative Time Table:

  • IPO Opening Date: 23 February 2021
  • IPO Closing Date: 23 February 2021
  • Finalization of Basis of Allotment: 2 March 2021 
  • Initiation of refunds: 3 March 2021
  • Transfer of shares to Demat accounts: 4 March 2021
  • Listing Date: 5 March 2021

Outlook:

Gujarat-based Heranba Industries is one of the leading domestic producers of synthetic pyrethroids in India with 3-year CAGR Revenue growth at 9% and 3-year CAGR Net Income growth at 27%. Net income from operations has grown by 28% between FY19 to FY20.

At an upper price band of INR 627 and EPS of 25.03 for the FY20 PE ratio of the company is 25 which is little higher than average PE ratio of 22 of its peer companies however the business model of the peer is slightly different. Thus, we may consider that the IPO is reasonably priced.

The margins of the company are improving in the last three years. The Company has a consistent dividend track record with stable revenue growth. Eyeing the growth of the company as demand for pyrethroids in India and worldwide are going to remain positive during 2020-2025 we may expect the company to have a better performance in the upcoming years.

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