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Gandhar Oil Refinery IPO

Introduction:

In the dynamic world of investments, Initial Public Offerings (IPOs) serve as a crucial avenue for investors to participate in the growth stories of promising companies. As we move into the penultimate week of November 2023, as many as five mainboard companies have already announced the launch of their IPOs. One such offering that has garnered significant attention is the Gandhar Oil Refinery IPO.

Gandhar Oil Refinery, one of the most substantial players in the Indian oil and gas industry, will debut on the primary market on Wednesday, 22 November 2023. This article aims to provide a comprehensive overview of the key aspects surrounding the Gandhar Oil Refinery IPO to help you make a well-informed investment decision. Keep reading.

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Details of the IPO

The Gandhar Oil Refinery IPO opens for public subscription on Wednesday, 22 November 2023 and closes on Friday, 24 November 2023. It comprises a fresh issue worth Rs. 302 crores and an offer for sale worth Rs. 198.69 crores. The price band for this book-building IPO has been set as Rs. 160 to Rs. 169 per share. Refer to the table below for details:

IPO Date 22 November to 22 November 2023
Basis of Allotment 30-Nov-23
Listing Date 05-Dec-23
Face Value Rs. 2 per share
Price Band Rs. 160 to Rs. 169
Lot Size 88 shares
Total Issue Size 29,626,732 equity shares (Worth Rs. 500.69 crores)
Fresh Issue 17,869,822 equity shares (Worth Rs. 302 crores)
Offer for Sale 11,756,910 equity shares (Worth Rs. 198.69 crores)
Listing At NSE, BSE

About Gandhar Oil Refinery Limited

Gandhar Oil Refinery is one of India's leading manufacturers of white oils and mainly caters to consumer and healthcare-based industries. As of 30 June 2023, the company’s product portfolio comprised more than 440 oils, including personal care, healthcare and performance oils (PHPO), lubricants and insulating oils (LIO), and speciality oils. These products are packed and sold under the “Divyol” brand.

Gandhar Oil Refinery has been operating in India for over 30 years, and the production scale has increased steeply in the last three years. The company was initially known as Taloja Plant before merging with the Gandhar Oil Refinery Limited in 2023. As of June 2023, the company is serving over 3,500 global clients, including Procter & Gamble (P&G), Unilever, Dabur, Marico, Patanjali, Encube, Bajaj Consumer Care, Emami, and Amrutanjan Healthcare.

Strengths of Gandhar Oil Refinery Ltd.

Below are the strengths of Gandhar Oil Refinery Ltd. as per the Draft Red Herring Prospectus (DRHP) filed with the Securities and Exchange Board of India (SEBI):

  • The company is the leading producer of white oils in India in terms of revenues
  • It boasts significant overseas sales in the United Arab Emirates (UAE)
  • The revenue from operations grew at a Compound Annual Growth Rate (CAGR) of over 49% between the financial years 2020-2022
  • A high percentage of repeat orders from clients indicates optimum customer satisfaction and product quality
  • The three manufacturing facilities are strategically located in Western India and UAE
  • The company boasts a global and well-diversified client and supplier base
  • A resilient, flexible, and scalable business model has helped in quick expansion

Key Weaknesses Highlighted

Below are the key weaknesses of Gandhar Oil Refinery Ltd. as highlighted in the DRHP:

  • A major portion of the revenue comes from the limited number of clients
  • The prices of raw materials are subjected to fluctuations in global crude oil prices
  • A decline in the demand for products may lead to a loss of revenue
  • Delays or interruptions in the supply of raw materials or finished goods may hamper the business
  • The company is exposed to counterparty credit risks
  • It has to adhere to strict quality requirements and government regulations

Core Financials of Gandhar Oil

Analysing the core financials of the issuing company can provide you with an idea of the growth prospects of its IPO. Gandhar Oil Refinery Ltd. boasts robust financials with constantly expanding net worth, revenues, and profits on a YoY basis. The table below depicts key financials of the company for the last three financial years:

Particulars Three-month Period Ended June 30, 2023 As of and for FY Ended March 31
2023 2022 2021
Share Capital 16 16 16 16
Net Worth 811 760 561 445
Total Borrowings 336 170 158 79
Revenue From Operations 1070 4079 3543 2221
EBITDA Adjusted 84 317 246 139
Profit After Tax 54 213 164 100
Earnings Per Share (Diluted) 6 24 18 13
Return on Capital (%) 9% 41% 42% 29%

*Amount in Crores. Source – RHP Dated 15 November 2023 on SEBI website.

To conclude

Investing in an IPO calls for careful consideration of multiple factors, and the Gandhar Oil Refinery IPO is no different. You must conduct thorough research, analyse the company’s financials, and review the DRHP to make an informed decision.

 

Related Articles:  How to Analyse an IPO | What is IPO Grading? | What is Cut Off Price In IPO Application 

 

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