Gandhar Oil IPO Guidance

View on Gandhar Oil IPO by Prashanth Tapse, Research Analyst, Sr VP Research, Mehta Equities Ltd

“We believe the Gandhar Oil IPO offers gives investors an opportunity to invest in the largest manufacturer of white oils company which exports to over 100 countries. We think as a well-established player in white oil, a company holding a dominant market share with an extensive product portfolio of 440 products, caters to diverse consumers and healthcare worldwide. We also believe with the evidence of repeat order percentage exceeding 80% underscore a stable customer relationship and competitive pricing. The 3 decades of experience in the specialty oils sector reflect a resilient, flexible and scalable business model with emphasis on efficiency, cost reduction, and risk mitigation strategies that showcase a prudent risk management framework. By looking at the financials the company has shown a strong growth between fiscal 2022 and 2023 with a 59.4%/15.13% in revenue from operations and 63%/30% in net profit. On Valuation parse at upper price band of Rs.169/-, the issue is asking for a Market Cap of Rs.1654 crore. Based on annualized FY24 earnings and fully diluted post-IPO paid-up capital, the company is asking a P/E of 7.62x which seems the valuations are reasonable when compared to its industry peers which are trading above 17x on average. Giving a good room of listing gains due to valuation gap between listed and Gandhar Oil. We believe the company has created a niche place in white oil and serving diversified industrial users which gives this company an edge against the peers in the segment. Hence, considering all the parameters, we are recommending investors to “Subscribe” the issue for listing only.”

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