IRM Energy Limited is a gas distribution company. The company is involved in developing, operating, and expanding of local natural gas distribution network. IRM Energy is a value-driven energy enterprise serving industrial, commercial, domestic, and automobile customers.
OBJECTS OF THE ISSUE
- Funding capital expenditure requirements for the development of the City Gas Distribution network.
- Repayment of all or a portion of certain outstanding borrowings availed by the Company.
KEY MANAGERIAL PERSONNEL
Maheswar Sahu
He is a Non-Executive Director of the Company and the Chairman of the Board of Directors of company. He had active involvement in handling various portfolios in Government including PSU management.
Karan Kausha
He is Chief Executive Officer (CEO) of the Company on July 13, 2020. He has been associated with the Company since September 5, 2016. He has 16 years of experience in the field of General Management, Strategy, Business Development and Project Management.
Harshal Anjaria
Harshal Anjaria was appointed as the Chief Financial Officer (CFO) of the Company on July 13, 2017. He has been associated with the Company since July 11, 2016. He has been associated with the Company since July 11, 2016.
Shikha Jain
Shikha Jain was appointed as the Company Secretary and Compliance Officer of the Company on January 4, 2020 and November 7, 2022, respectively. She has been associated with the Company since September 2, 2019. She has over 5 years of experience in corporate secretarial and other related compliances.
COMPANY PROFILE
- Company develop natural gas distribution projects in the geographical areas (“GAs”) for industrial, commercial, domestic and automobile customers.
- The company has marked its presence in Banaskantha District in the state of Gujarat, Fatehgarh Sahib in the state of Punjab, and Diu & Gir-Somnath in the Union Territory of Daman & Diu and the state of Gujarat.
- The company is fulfilling the natural gas requirements of 48172 domestic clients, 179 industrial units, and 248 commercial clients.
- As of September 2022, the company has 216 CNG gas stations across its operating geographical areas.
- The company has received an award of City Gas Distribution- Growing Company of the Year 2020 from the Federation of Indian Petroleum Industries.
- Company supply natural gas to two primary set of customer segments that are CNG and PNG.
COMPETITIVE STRENGTHS
- Exclusivity in CNG and PNG supply in the awarded geographical areas.
- Diverse customer portfolio and distribution network of CNG and PNG.
- Strong parentage, experienced board and management team and strong execution team.
- Technology adoption and digital initiatives for efficient and optimal operations.
- Connectivity to gas pipelines and establishing cost-effective gas sourcing arrangements.
- Strong financial performance with consistent growth and profitability supported by healthy operating efficiency and favourable regulations.
KEY STRATEGIES
- Expand company’s presence in existing and newer geographical areas through an improved captive distribution channel.
- Infrastructure roll-out for development and operation of the new licensed geographical areas of Namakkal & Tiruchirappalli, Tamil Nadu.
- Technology adoption to increase operational efficiency and enhance customer value.
- Business integration for transition into a complete energy solution provider.
KEY CONCERNS
- Transporting natural gas is hazardous and could result in accidents, which could adversely affect the company’s reputation, business, financial condition, results of operations, and cash flows.
- The Company typically requires 15-18 months to generate revenue in its geographical areas. Any further delay in realizing revenue may affect projections, results of operations, and cash flows.
- Its operations are restricted to defined geographical boundaries and the natural gas requirements in these regions may be affected by various factors.
- Companies require various licenses and approvals for undertaking their businesses.
- The company is heavily reliant on CNG and industrial PNG supply operations and any decrease in the sales may have an adverse effect on the business.
- The company is dependent on Government policies for the allocation of natural gas and the cost of gas supplied for CNG and domestic PNG customers.
COMPARISON WITH LISTED INDUSTRY PEERS (AS ON 31ST MARCH 2023)
FINANCIALS (RESTATED CONSOLIDATED)
OUTLOOK & VALUATION
IRM has showcased consistent development of its gas distribution business in its key GAs. The company has a diverse customer portfolio and distribution network of CNG and PNG and a strong relationship with its customers. It has also reported strong financial performance in the last few years, except in FY23, when profit was impacted by a rise in gas prices due to geopolitical situations.
The company is still in the early stages of growth and may be impacted by unforeseen factors and other risks like limited geographic reach, government policies, delayed revenue generation, etc.
The issue is coming at a P/E valuation of 24.12x, which appears fairly priced. Thus, considering all these factors and the positive growth outlook, we will recommend a Subscribe rating to this IPO.
DISCLAIMER:
The information contained herein are strictly confidential and are meant solely for the information of the recipient and shall not be altered in any way, transmitted to, copied or distributed, in part or in whole, to any other person or to the media or reproduced in any form, without prior written permission of Swastika Investmart Ltd. (“SIL”). The contents of this document are for information purpose only. This document is not an investment advice and must not alone be taken as the basis for an investment decision. Before taking any decision to invest, the recipient of this document must read carefully the Red Herring Prospectus (“RHP”) issued to know the details of IPO and various risks and uncertainties associated with the investment in the IPO of the Company. All recipients of this document must before acting on the given information/details, make their own investigation and apply independent judgment based on their specific investment objectives and financial position. They can also seek appropriate professional advice from their own legal and tax consultants, advisors, etc. to understand the risks and investment considerations arising from such investment. The investor should possess appropriate resources to analyze such investment and the suitability of such investment to such investor’s particular circumstances before making any decisions on the investment. The Investor shall be solely responsible for any action taken based on this document. SIL shall not be liable for any direct or indirect losses arising from the use of the information contained in this document and accept no responsibility for statements made otherwise issued or any other source of information received by the investor and the investor would be doing so at his/her/its own risk. The information contained in this document should not be construed as forecast or promise or guarantee or assurance of any kind. The investors are not being offered any assurance or guaranteed or fixed returns on their investments. The users of this document must bear in mind that past performances if any, are not indicative of future results. The actual returns on investment may be materially different than the past. Investments in Securities market products and instruments including in the IPO of the Company are highly risky and they are generally not an appropriate avenue for someone with limited resources/ limited investment and low risk tolerance. Such Investments are subject to market risks including, without limitation, price, volatility and liquidity and capital risks. Therefore, the users of this document must carefully consider all the information given in the RHP including the risks factors before making any investment in the Equity Shares of the Company.
Swastika Investmart Ltd or its analysts did not receive any compensation or other benefits from the companies mentioned in the report or third party in connection with preparation of the research report. Accordingly, neither Swastika Investmart Ltd nor Research Analysts have any material conflict of interest at the time of publication of this report. Compensation of our Research Analysts is not based on any specific merchant banking, investment banking or brokerage service transactions. Swastika Investment Ltd may have issued other reports that are inconsistent with and reach different conclusion from the information presented in this report. Research entity has not been engaged in market making activity for the subject company. Research analyst has not served as an officer, director or employee of the subject company. We have not received any compensation/benefits from the Subject Company or third party in connection with the Research Report.
CORPORATE & ADMINISTRATIVE OFFICE - 48, Jaora Compound, M.Y.H. Road, Indore - 452 001 | Phone 0731 - 6644000
Compliance Officer: Ms. Sheetal Duraphe Email: compliance@swastika.co.in Phone: (0731) 6644 241
Swastika Investmart Limited, SEBI Reg. No. : NSE/BSE/MSEI: INZ000192732 Merchant Banking: INM000012102 Investment Adviser: INA000009843 MCX/NCDEX: INZ000072532 CDSL/NSDL: IN-DP-115-2015 RBI Reg. No.: B-03-00174 IRDA Reg. No.: 713.
.webp)
.png)
.png)
