Key IPOs to watch out for next week

As the Diwali celebrations wind down and market holidays conclude, Indian investors are bracing for a dynamic week ahead with the launch of four significant initial public offerings (IPOs). The featured IPOs include Gandhar Oil Refinery India, Fedbank Financial Services, Indian Renewable Energy Development Agency (IREDA), and the much-anticipated Tata Technologies IPO.

The Securities and Exchange Board of India (SEBI), the capital markets regulator, has granted approval to Fedbank Financial Services, IREDA, EPACK Durable, and Suraj Estate Developers for IPO capital raising. These companies, which submitted preliminary IPO papers between July and September, received observation letters from SEBI between October 30 and November 10, indicating a green light for their IPO launches.

Gandhar Oil Refinery India Ltd IPO:

The Gandhar Oil Refinery India IPO is set to open for subscription on Tuesday, November 21, with the closing date scheduled for Thursday, November 23. Reports indicate that the allocation to anchor investors for the IPO will take place on Monday, November 20. However, the price band for the Gandhar Oil Refinery IPO is still awaited. The IPO comprises a fresh issue of shares amounting to up to ₹357 crore and an offer for sale (OFS) of up to 12,036,380 equity shares, each with a face value of ₹2. Prominent in the OFS are promoters Ramesh Babulal Parekh, Kailash Parekh, and Gulab Parekh, each planning to sell 2,250,000 equity shares.

As outlined in the Draft Red Herring Prospectus (DRHP), the net proceeds from the new issue are earmarked for various purposes. These include investing in Texol through a loan to facilitate the repayment or prepayment of a loan facility obtained from the Bank of Baroda. Additionally, funds will be allocated for capital expenditure, encompassing the purchase of equipment and civil work essential for expanding automotive oil capacity at the Silvassa Plant. The plan also involves expanding petroleum jelly capacity and the accompanying cosmetic product division at the Taloja Plant, as well as enhancing white oil capacity by installing blending tanks at the Taloja Plant.

The new issue’s net proceeds will further be utilized for financing the company’s working capital requirements and general corporate purposes. The registrar for the Gandhar Oil Refinery India IPO is Link Intime India Private Ltd, while the book running lead managers are Edelweiss Financial Services Ltd and ICICI Securities Limited.

Indian Renewable Energy Development Agency IPO:

The IREDA IPO has set its price band at ₹30 to ₹32 per equity share with a face value of ₹10. The subscription for the IPO opens on Tuesday, November 21, and concludes on Thursday, November 23. The allocation to anchor investors for the Indian Renewable Energy IPO is slated for Monday, November 20. The floor price is set at three times the face value of the equity shares, and the cap price is fixed at 3.20 times the face value. The price/earnings ratio, based on diluted EPS for fiscal 2023, stands at 7.94 times for the floor price and 8.47 times for the cap price. The lot size for the IREDA IPO is 460 equity shares, with subsequent multiples in increments of 460 equity shares.

The IPO encompasses a fresh issue of up to 403.16 million shares and an offer for sale (OFS) of up to 268.78 million equity shares, with the President of India, acting through the Ministry of New and Renewable Energy, as the seller. The offer also includes a reservation for employee subscription. As outlined in the Red Herring Prospectus (RHP), the proceeds from the fresh issue will be directed towards augmenting the capital base to meet future capital requirements and to support ongoing lending activities.

Tata Technologies IPO:

The Tata Technologies IPO is set to open for subscription on Wednesday, November 22, and will conclude on Friday, November 24. As of now, the price band for the Tata Technologies IPO is eagerly awaited. According to an exchange filing by Tata Motors on November 13, Tata Technologies Ltd submitted its Red Herring Prospectus (RHP) to the registrar of companies, Maharashtra, Pune. The IPO is structured as an Offer For Sale (Offer) of up to 60,850,278 equity shares for cash. This offering includes up to 46,275,000 Equity Shares by the Company, up to 9,716,853 Equity Shares by Alpha TC Holdings Pte. Ltd., and up to 4,858,425 Equity Shares by Tata Capital Growth Fund I. These represent 11.41%, 2.40%, and 1.20% of the paid-up Equity Share Capital of Tata Technologies Limited, respectively.

Tata Technologies Limited, a division of Tata Motors Limited, filed the Draft Red Herring Prospectus (DRHP) for the IPO with the Securities and Exchange Board of India on March 9, 2023. Noteworthy financial firms, including JM Financials, Citi, and BoFA Securities, have been selected by the company to facilitate the IPO process. The listed industry peers for Tata Technologies include KPIT Technologies Ltd (with a P/E of 83.10), L&T Technology Services Ltd (with a P/E of 40.92), and L&T Technology Services Ltd (with a P/E of 70.67).

Fedbank Financial Services Ltd IPO:

The Fedbank Financial Services Ltd IPO is scheduled to open for subscription on Wednesday, November 22, and will conclude on Friday, November 24. Reports indicate that the allocation to anchor investors for the Fedbank IPO is set to take place on Tuesday, November 21. The pricing details, including the price band, are currently awaited. The Fedfina IPO, a subsidiary of Federal Bank, comprises a fresh issue of equity shares valued at up to ₹750 crore and an offer-for-sale (OFS) of up to 70,323,408 equity shares. The promoters, selling shareholders, and the promoter group collectively constitute the offer, with each equity share having a face value of ₹10.

The Federal Bank, as the promoter shareholder, may sell up to 16,497,973 equity shares, while True North Fund VI LLP, another shareholder, may sell up to 53,825,435 equity shares, making up the total offer for sale of 70,323,408 equity shares. The Book Running Lead Managers (BRLM) for the issue are ICICI Securities Ltd, BNP Paribas, Equirus Capital Private Ltd, and JM Financial Ltd, with Link Intime India Private Ltd serving as the registrar to the offer. FedFina, a Federal Bank subsidiary, filed the Draft Red Herring Prospectus (DRHP) for the IPO last year. Notable industry peers for Fedbank Financial Services Ltd include Aptus Value Housing (with a P/E of 27.04), IIFL Finance (with a P/E of 14.52), Five Star Business Finance (with a P/E of 31.73), Manappuram Finance Limited (with a P/E of 7.28), and Muthoot Finance Limited (with a P/E of 14.29).