Gandhar Oil Refinery India makes a strong debut on D-Street, shares list at 76% premium over issue price

White oil manufacturer Gandhar Oil Refinery (India) Ltd's shares entered the listed space on a strong note on Thursday. The stock debuted at Rs 295.4 apiece on BSE, a premium of Rs 126.4 or 74.8 per cent over the upper end of the price range of the company's IPO. 

Gandhar Oil Refinery shares began their journey on NSE at Rs 298 apiece, a premium of Rs 129 or 76.3 per cent.    

The listing of Gandhar Oil Refinery shares was better than market wizard Anil Singhvi's expectations. 

EDITOR'S TAKE | Long-term investors should hold 

Zee Business Managing Editor Anil Singhvi, who had recommended subscribing to the Gandhar IPO for a good listing gain and for the long term, expected Gandhar Oil shares to debut in the secondary market at Rs 230-245, a premium of up to 45 per cent over the issue price.

He recommends long-term investors to hold the Gandhar stock and short-term investors to place a stop loss at Rs 220.

Ahead of the launch of the IPO, Singhvi pointed out the following key points about the white oil maker: 

Positive

• A market leader with a strong promoter background
• A stable financial track record
• Attractive valuation

Negative

• Negative operating cash flow in the first quarter of FY24
• The working capital cycle is increasing continuously

Key things to know about the Gandhar Oil Refinery IPO 

The IPO of Gandhar Oil Refiner, which was open for subscription from November 22 to November 24, was subscribed an overall 64 times owing to strong participation from all types of investors. At the end of the three-day book-building process, the IPO received bids for as many as 136.1 crore shares as against the 2.1 crore shares on offer, according to exchange data. 

Here's how investors in the various categories responded to the issue: 

Gandhar Oil shares were available for bidding in multiples of 88 in a price band of Rs 160-169 under the IPO, which comprised fresh issuance worth Rs 302 crore and an offer for sale (OFS) worth Rs 199 crore.   

What analysts say 

"The solid listing gain was above our expectations mainly on the back of the reasonable valuation among its peers," said Prashanth Tapse, Senior VP (Research) at Mehta Equities.

"We believe the valuation gap has narrowed to Gandhar peers and hence we expect a limited upside from the current levels," he said.

What does Gandhar Oil Refinery do?

Gandhar Oil Refinery (India) Ltd is a manufacturer of specialty oils with a growing focus on the consumer and healthcare-end industries.

The company produces a broad variety of specialty oils and lubricants such as white oils, waxes, jellies, automotive oils, industrial oils, transformer oils and rubber processing oils, and sells its products under its flagship brand Divyol. It has three decades of experience in the specialty oils industry. 

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