(i) Dr. Rajiv Indravadan Modi is one of the promoters of the company. He is the Chairman and Managing Director of the company. He holds a Bachelor of Technology in chemical engineering from Indian Institute of Technology, Bombay. He also holds a diploma in Biochemical Engineering from University College London and a degree of a Doctor of Philosophy (Biological Sciences) from University of Michigan. He is a fellow member at Indian National Academy of Engineering. He also serves as the Chairman of Board of Governors of IIT Guwahati and Chairperson of the Board of Governors of IIT Gandhinagar, Gujarat. (ii) Maheswar Sahu is a Non-Executive Director of our Company and the Chairman of the Board of Directors of our Company. He holds a Bachelor of Science degree in electrical engineering from Regional Engineering College, Rourkela. He also holds a Master of Social Science degree from the University of Birmingham. He joined Indian Administrative Service (IAS) in 1980.

A. Balance Sheet

Particular (In Million)	Mar-21	Mar-22	Mar-23
Equity Share Capital	289.99	293.70	302.60
Reserves	886	2,144	3,162
Borrowings	1,634	2,026	3,038
Trade Payables	101	251	312
Other Liabilities	471	834	1,115
Total Liabilities	2,205	3,111	4,465
Net Block	2,308	2,848	3,610
Capital Work in Progress	197	523	911
Investments	61	257	324
Other Assets	238	506	829
Total NC Assets	2,805	4,134	5,674
Receivables	112	227	386
Inventory	8	17	19
Cash & Bank	414	997	985
Other Assets	42	173	865
Face value	10	10	10

B. Profit & Loss Statement

Particular (In Million)	Mar-21	Mar-22	Mar-23
Sales	2,118	5,461	10,391
Purchases of Stock In Trade	771	2,492	7,795
Change in Inventory	-0.2	-10	3
Employee Cost	41	72	91
Selling and admin	222	390	590
Other Expenses	352	653	790
Other Income	7	31	60
EBITDA	739	1,895	1,182
EBITDA Margin	34.91%	34.69%	11.38%
Depreciation	120	150	209
Interest	159	221	229
Profit before tax	461	1,524	744
Tax	110	388	180
Net profit	351	1,136	564
NPM (%)	16.53%	20.68%	5.40%

C. Cash Flow Statement

Particular (In Million)	Mar-21	Mar-22	Mar-23
Cash From Operating Activity
Profit From Operation	735	1,913	1,301
Receivable	-63	-115	-159
Inventory	-1	-9	-2
Payable	-89	14	339
Other WC Items	-37	-298	-732
Working Capital Changes	-189	-408	-554
Direct Taxes	-91	-218	-280
Net Cash Inflow from Operating Activity	454	1286	467
Cash from Investing Activity
Fixed assets purchased	-351	-905	-1625
Investments purchased	-76	-139	-730
Investment sold	0	0	290
Other investing items	6	-60	49
Net cash inflow from investing activities	-420	-1103	-2016
Cash from Financing Activity
Proceeds from shares	44	16	413
Proceeds from borrowings	172	437	1153
Repayment of borrowings	0	-61	-159
Intrest paid fin	-137	-194	-192
Dividends paid	0	-35	-15
Other financing items	24	-12	-23
Net Cash Flow	137	334	-373

 

Name of the Company	Revenue (In Crore)	PAT (In Crore)	EPS ( in Rs)	P/E	CMP	Mcap (In Crore)
IRM Energy Limited	1039	56	13.74	36.7	505	2,074
Gujarat Gas Limited	16759	1,528	22.20	21.5	426	29,332
Indraprastha Gas Limited	14,146	1,445	20.6	22.9	478	33,449
Mahanagar Gas Limited	6,299	790	79.98	11.4	1,122	11,088
Adani Total Gas Limited	4,378	546	4.97	120	608	66,973

* All the data is as per FY23.

Review and Recommendation of IRM Energy IPO by IZ team is 4/10

A) Business Overview

IRM Energy is an Indian City Gas Distribution (CGD) company with operations in multiple geographical areas (GAs) including Banaskantha (Gujarat), Fatehgarh Sahib (Punjab), Diu & Gir Somnath, and Namakkal & Tiruchirappalli (Tamil Nadu). The company is focused on providing natural gas at competitive prices, maintaining high safety standards.

Key Highlights

a) Diverse Operations: Presence in multiple states and Union Territories. b) Cost-Effective: Competitive gas prices to attract PNG industrial customers. c) Safety: High safety standards to ensure reliable supply. d) Regulatory Approvals: Authorization for GAs in Banaskantha and Fatehgarh Sahib. e) EV Infrastructure: MoU with Mindra EV Private Limited for setting up EV charging stations.

B) Objectives of the IPO

1. Capital Expenditure: To fund the development of the CGD network in Namakkal and Tiruchirappalli. 2. Debt Repayment: To prepay or repay certain outstanding borrowings. 3. General Corporate Purposes: For other operational needs.

C) Management Team

1. Dr. Rajiv Indravadan Modi: Chairman and MD, highly educated with significant industry experience. 2. Maheswar Sahu: Non-Executive Director, brings administrative experience as an IAS officer.

D) Financials

A) Balance Sheet 1. Equity Share Capital: Increased from ₹28.99 Crore in Mar-21 to ₹30.26 Crore in Mar-23. 2. Reserves: Significant jump from ₹88.6 Crore to ₹316.2 Crore. 3. Borrowings: Increased to ₹303.8 Crore in Mar-23. B) Profit &Loss 1. Sales: Grew significantly from ₹211.8 Crore to ₹1,039.1 Crore. 2. Net Profit: Increased to ₹56.4 Crore in Mar-23, but the Net Profit Margin decreased to 5.40%. C) Cash Flow 1. Operating Cash Flow: Positive but reduced to ₹46.7 Crore in Mar-23. 2. Investing Cash Flow: Negative, mainly due to significant investments in fixed assets, amounting to -₹201.6 Crore. 3. Financing Cash Flow: Varied, due to proceeds from borrowings and share issuance, net cash flow was -₹37.3 Crore.

E) Peer Comparison

1. Valuation: IRM Energy is trading at a P/E of 36.7, which is higher than its peers. 2. EPS: Has an EPS of 13.74, lower than peers like Gujarat Gas and Indraprastha Gas. 3. Market Cap: Significantly smaller compared to peers like Gujarat Gas and Indraprastha Gas.

F) Conclusion and Recommendations

IRM Energy has shown robust growth in sales and has a diversified presence across India. The IPO objectives align with the company's growth strategy. However, there are some concerns: 1. Valuation: The company is priced higher compared to its peers. 3. Profit Margin: The declining profit margin needs to be closely monitored. Investors looking for long-term growth may consider this IPO but should be cautious of the valuation and the decreasing profit margins.