Shares of agrichemicals manufacturer Heranba Industries plunged over 9 percent on Monday, a day after the company made a stellar debut on the bourses.

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The stock of Heranba Industries got listed on Friday with a hefty premium of 43.54 percent at Rs 900 on the BSE against the issue price of Rs 627 per share. It ended lower than its listing price at Rs 812.25 on Friday, but still above the issue price.

On Monday, the stock price again fell as much as 9.33 percent to a low Rs 736.40 apiece on the BSE as investors continue to book profits. It ended 7.72 percent lower at Rs 749.55 per share.

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Heranba Industries makes a strong debut; lists with 43.5% premium at Rs 900 per share

Certain analysts suggested investing in the Initial Public Offering (IPO) of Heranba Industries for listing gains.

"Heranba came out with an IPO at an issue price of Rs 627 per share. At current levels, the stock is trading at a P/E multiple of 31.1xFY20 EPS of Rs 25 which is at a premium to peers like Rallis India. We would therefore recommend investors to book profits in the stock at current level,” said Jyoti Roy - DVP- Equity Strategist, Angel Broking.

Nirali Shah, Head - Equity Research, Samco Securities, had also recommended investors to subscribe to this IPO for listing gains and cautioned the investors about the prevailing market sentiment.

“The company faces high risk due to shoot up in raw material prices which forms a whopping 70 percent of its expenses. Moreover, it faces high competition risk from peers such as Rallis India, Bharat Rasayan and Sumimoto Chemical. But despite these risks, Heranba continues to capture a dominant position with sound fundamentals and diversification capabilities,” Shah said.

The IPO of Heranba Industries, which was open from February 23-25 was subscribed 83.3 times at a price band of Rs 626-627 per share. The quota for qualified institutional investors was subscribed 67.45 times and the retail portion 11.84 times. The HNI quota saw 271.15 times subscription.

The Heranba Industries' IPO comprised an offer-for-sale (OFS) of up to 90.15 lakh equity shares and a fresh issue of Rs 60 crore shares. The net fresh issue proceeds will be utilised for working capital requirements.

Heranba Industries is a crop protection chemical manufacturer and is one of the leading domestic producers of synthetic pyrethroids like cypermethrin, deltamethrin, lambda-cyhalothrin etc.

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First Published:Mar 8, 2021 3:45 PM IST