Gandhar Oil Refinery India IPO: Issue Opens on November 22 | Unveiling the Company’s Strategic Vision
Gandhar Oil Refinery India IPO
Gandhar Oil Refinery India IPO Unveiled: A Comprehensive Insight into the Offering
The Gandhar Oil Refinery India IPO is poised to captivate the financial markets as it opens its subscription window from November 22 to November 24, marking a significant milestone for the white oil manufacturing company.
This IPO, the third to open in the upcoming week after Indian Renewable Energy Development Agency and Tata Technologies, is generating anticipation as investors prepare to explore an opportunity to become part of the company’s growth journey.
As the financial landscape prepares for this offering, a detailed analysis of the key aspects of the IPO, its details, and the company’s plans sheds light on what lies ahead.
IPO Details:
The IPO is structured to include fresh equity shares valued at Rs 302 crore, as outlined in the draft documents. In addition to this, an Offer for Sale (OFS) will be implemented, featuring 1.17 crore shares offered by both promoters and existing shareholders, with an estimated total capital infusion of approximately Rs 500 crore.
The price band for the IPO is expected to be disclosed by Friday, and a one-day advance opening for anchor investors is scheduled for November 21, offering strategic investors an exclusive opportunity.
Promoters Ramesh Babulal Parekh, Kailash Parekh, and Gulab Parekh are set to participate in the OFS, each divesting 22.5 lakh shares. Simultaneously, entities such as Green Desert Real Estate Brokers, Denver Building Mat & Decor TR LLC, and Fleet Line Shipping Services LLC are expected to exit the company by selling their entire shareholding of 30 lakh, 10 lakh, and 10 lakh shares, respectively.
Utilization of Funds:
The allocation of funds raised through the IPO reflects the company’s strategic approach to enhance its operations and strengthen its market position. A substantial portion of the funds will be directed towards repaying the loan of Rs 22.71 crore of its subsidiary company, Texol.
Furthermore, an investment of Rs 27.73 crore is earmarked for the purchase of equipment and civil work required to augment the capacity of automotive oil at the Silvassa plant.
Working capital needs, a critical component of sustaining and expanding operations, will receive attention with an allocation of Rs 185 crore.
This underlines the company’s commitment to maintaining operational fluidity and meeting the demands of a dynamic market.
The remaining funds will be utilized for general corporate purposes, providing the company with the flexibility to adapt to evolving business landscapes.
About Gandhar Oil Refinery:
Gandhar Oil Refinery stands as a major player in the production of white oil, boasting a diverse product portfolio primarily catering to the personal care, healthcare, performance oils (PHPO), lubricants, and performance and insulating oils (PIO) divisions under the well-established Divyol brand.
The company’s extensive reach is evident in its long-term relationships with a multitude of domestic and global customers, including industry giants like Procter & Gamble, Unilever, Marico, Dabur, Encube, Patanjali Ayurveda, Bajaj Consumer Care, Emami, and Amritanjan Healthcare.
The company’s prominence is further underscored by its promoters, the Parekh family, holding an impressive 87.5 percent stake in India’s largest producer of white oil.
This robust ownership structure has been a key factor in the company’s stellar performance, reporting a commendable revenue growth at a Compound Annual Growth Rate (CAGR) of 40.6 percent during the period from FY21 to FY23.
Public shareholders, including IDFC Asset Management Company, contribute to the remaining shares, showcasing a healthy balance between promoter and public ownership.
The IPO is expected to provide an avenue for additional public participation, allowing a broader investor base to become stakeholders in the success story of Gandhar Oil Refinery.
Financial Performance:
Gandhar Oil Refinery’s financial track record is a testament to its resilience and strategic acumen in navigating the market dynamics.
The reported revenue growth at a CAGR of 40.6 percent over the last two fiscal years positions the company as a high-growth entity in the white oil manufacturing sector.
This stellar performance reflects not only the company’s adept management but also the robust demand for its products in both domestic and international markets.
Promoters and Stakeholder Landscape:
The Parekh family, comprising Ramesh Babulal Parekh, Kailash Parekh, and Gulab Parekh, has been the driving force behind Gandhar Oil Refinery’s success.
Their substantial 87.5 percent stake in the company underscores their unwavering commitment to its growth and prosperity.
This concentrated ownership structure ensures a cohesive and aligned approach to decision-making, contributing to the company’s agility and ability to swiftly capitalize on market opportunities.
The remaining shares held by public shareholders, managed by entities such as IDFC Asset Management Company, further diversify the ownership landscape.
This blend of promoter and public ownership signifies a balanced governance model, instilling confidence in potential investors regarding transparency and accountability.
Merchant Bankers and Advisors:
For this pivotal IPO, Gandhar Oil Refinery has enlisted the expertise of renowned financial institutions. ICICI Securities and Nuvama Wealth Management are serving as the merchant bankers, guiding the company through the intricacies of the IPO process.
Their involvement adds a layer of credibility to the offering, assuring investors of a well-structured and meticulously managed IPO.
Industry Overview:
Gandhar Oil Refinery operates in a niche yet crucial segment of the market – white oil manufacturing. White oil finds application in various industries, including personal care, healthcare, and lubricants.
The company’s product portfolio, spanning personal care products, healthcare solutions, and performance oils, positions it as a comprehensive provider catering to diverse customer needs.
The demand for white oil is driven by its versatility and application across multiple industries. In the personal care sector, it serves as a key ingredient in cosmetics and pharmaceuticals.
In healthcare, white oil is utilized in medicinal formulations. The lubricants and performance oils division caters to the automotive and industrial sectors, highlighting the company’s broad market reach.
Outlook and Future Growth Potential:
As Gandhar Oil Refinery charts its course into the public domain through this IPO, the outlook for the company appears promising.
The funds raised are strategically earmarked for key areas that are pivotal for the company’s growth trajectory, including capacity augmentation, debt reduction, and working capital enhancement.
The company’s focus on maintaining and expanding its market presence is evident in its commitment to upgrading the Silvassa plant’s capacity for automotive oil.
This forward-looking approach aligns with the anticipated growth in demand for automotive oils, driven by the expanding automotive sector.
Furthermore, the repayment of subsidiary Texol’s loan demonstrates the company’s commitment to optimizing its financial structure and ensuring a robust balance sheet. This move not only enhances financial health but also positions the company favorably in the eyes of potential investors.
The allocation of funds towards working capital needs is a strategic move to ensure operational efficiency and flexibility.
In dynamic markets, having the financial bandwidth to respond swiftly to changing demands is a crucial advantage, and Gandhar Oil Refinery’s allocation of Rs 185 crore towards this end reflects a keen understanding of market dynamics.
Challenges and Risk Factors:
While the prospects for Gandhar Oil Refinery seem promising, it is essential to acknowledge and assess potential challenges and risk factors that could impact the company’s performance. Market volatility, regulatory changes, and unforeseen economic downturns are inherent risks in any industry.
As the company expands its capacity for automotive oil, it may face challenges associated with operational scalability, production efficiency, and market acceptance of the increased output. Navigating these challenges requires a proactive and adaptive management approach.
Currency fluctuations, given the company’s global footprint and customer base, could pose a risk to financial stability. The company’s ability to effectively hedge against currency risks will be crucial in mitigating this potential challenge.
Final Remarks:
The Gandhar Oil Refinery India IPO presents an exciting opportunity for investors to partake in the growth journey of a leading player in the white oil manufacturing sector. With a robust product portfolio, a history of impressive revenue growth, and a strategic allocation of funds from the IPO, the company is poised for continued success.
Investors keen on participating in this IPO should carefully evaluate the company’s financials, growth strategy, and risk mitigation measures.
The management’s track record, the industry outlook, and the expertise of the appointed merchant bankers contribute to the overall confidence in the offering.
As Gandhar Oil Refinery takes its place on the public stage, the IPO represents not only a capital-raising event but also a testament to the company’s achievements and its vision for the future.
The white oil manufacturer’s journey into the public domain is a chapter that holds the promise of sustained growth, innovation, and value creation for its stakeholders.
