Gandhar Oil Refinery (India) Private Limited is a leading manufacturer of white oils by revenue with a growing focus on the consumer and healthcare end-industries. As of June 30, 2023, the product suite comprised over 440 products primarily across the personal care, healthcare and performance oils ('PHPO'), lubricants and process and insulating oils ('PIO') divisions under the 'Divyol' brand. The products are used as ingredients by leading Indian and global companies for the manufacture of end products for the consumer, healthcare, automotive, industrial, power and tyre and rubber sectors. They are one of the top five players globally in terms of market share in the calendar year 2022. As of June 30, 2023, company's products were sold in over 100 countries across the globe. They catered to over 3,500 customers in the Financial Year 2023, including leading Indian and global companies such as Procter & Gamble ('P&G'), Unilever, Marico, Dabur, Encube, Patanjali Ayurved, Bajaj Consumer Care, Emami and Amrutanjan Healthcare, supported by the global supplier base and manufacturing operations in India and United Arab Emirates. The percentage of customers placing repeat orders in the quarter ended June 30, 2023 and the Financial Years 2023, 2022 and 2021 was 83.74%, 69.11%, 68.86% and 66.37%, respectively. Company has four business divisions, which are PHPO, Lubricants, PIO and Channel partners and they contribute 56.29%, 26.87%, 6.71% and 10.22% for Q1 FY24, 54.96%, 25.03%, 9.51% and 10.50% for FY23, 53.50%, 21.48%, 10.54% and 14.48% for FY22 and 44.64%, 27.38%, 12.68% and 15.30% for FY21. Company has successfully built relationships with leading oil companies including SK Lubricants, S-Oil, GS Caltex, and other global base oil suppliers as well as various Indian oil refining companies for the procurement of base oil, which is the primary raw material. Company currently operates three manufacturing facilities with a combined annual production capacity of 522,403 kL as of June 30, 2023, with plants located in (i) Taloja, Maharashtra (the 'Taloja Plant'), (ii) Silvassa, the Union Territory of Dadra and Nagar Haveli and Daman and Diu (the 'Silvassa Plant') and (iii) Sharjah, United Arab Emirates (the 'Sharjah Plant') to cater to domestic and overseas demand for the products. They are also in the process of enhancing the production capacity of the Taloja Plant by an aggregate of 100,000 kL, out of which, they commissioned an incremental capacity of 25,000 kL in October 2022. This enhancement of capacity is proposed to be funded out of the internal accruals and through external borrowings obtained by the Company. They expect to complete the enhancement to the production capacity during the Financial Year 2024. In addition, they separately intend to utilize Rs 277.29 million out of the Net Proceeds towards enhancing the manufacturing capabilities and expect to add an aggregate of 18,840 kL of annual production capacity at the Silvassa Plant for expansion in capacity of automotive oil. As of June 30, 2023, they operated 15 manufacturing facilities across five states in India, majority of which are strategically located in close proximity to the OEM customers. They recently commenced commercial manufacturing operations at the 16th manufacturing facility in Bhiwadi (Rajasthan) in July 2023. They have also been allotted land in Kolar, Karnataka from the relevant regulatory authority, on which they propose to develop a manufacturing facility. In addition, their Joint Venture operates one manufacturing facility in Gurugram, Haryana. As per financial performance, Gandhar Oil Refinery (India) Private Limited has posted total income / net profits of Rs 2,242.59 Cr / Rs 100.32 Cr (FY21), Rs 3,568.96 Cr / Rs 163.58 (FY22), Rs 4,101 Cr / Rs 213.18 Cr (FY23) and Rs 1,071.52 Cr / Rs 54.28 Cr (upto Q1 FY24). So as per previous financials data, company has shown good growth. Company has an average EPS of Rs 20.11 and average RoNW of 31.11% for last three fiscals. Issue is priced at a P/BV of 1.67 as per NAV of 101.35 as on 30.06.23. If we attribute latest earnings of FY22, FY23 and annualised FY24 on fully diluted equity post issue, then asking price is at a P/E of around 10.11, 7.76 and 7.62 respectively, which looks fairly priced. As per RHP, comparison between listed peers is shown in above table. On BRLM's front, three lead managers are associated with this IPO, and have handled around 62 IPOs in last three fiscals. Nuvama Wealth Management Limited : This is 17th IPO from this BRLM. From last 10 IPOs, two opened below issue price and remaining above issue price or at par on the day of listing. As of now, from last 10 IPOs, one is trading below issue price and remaining are trading above issue price or at par. (As on 17.11.2023) ICICI Securities Limited : This is 47th IPO from this BRLM. From last 10 IPOs, all opened above issue price or at par on the day of listing. As of now, from last 10 IPOs, all are trading above or at par of issue price. (As on 17.11.2023) As per financials, Gandhar Oil Refinery (India) Private Limited has shown good growth, RoNW is 32.28% and P/E is respectively 10.11, 7.76 and 7.62 as per FY22, FY23 and annualised FY24 earnings. So, issue looks fairly priced. Company is in business of manufacturing white oils with focus on the consumer and healthcare end-industries. Performance of BRLM is good. So, we give SUBSCRIBE rating for this IPO. Readers must consult a qualified financial advisor prior to making any actual investment decisions.
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