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28 September 2023

Hi-Green Carbon IPO: Transforming Waste into Green Energy

Introduction:

Hi-Green Carbon Limited made a remarkable entry to the capital market with an Initial Public Offering (IPO) worth Rs 52.80 crores. This offering was composed of two components: a fresh issue of 59.9 lakh shares, generating Rs 44.93 crores, and an offer for sale of 10.5 lakh shares, amounting to Rs 7.88 crores. The IPO subscription window opened on September 21, 2023, and concluded on September 25, 2023. Allotment results for the Hi-Green Carbon IPO were declared on Thursday, September 28, 2023, with the shares being listed on NSE SME on September 28, 2023. The IPO was offered within a price band of ₹71 to ₹75 per share. The minimum lot size for application was set at 1600 shares, with a minimum investment requirement of ₹120,000 for retail investors.

Key Market Participants:

The Hi-Green Carbon IPO was spearheaded by Beeline Capital Advisors Pvt Ltd as the book running lead manager, while Link Intime India Private Ltd took charge as the registrar. Spread X Securities played a pivotal role as the market maker for this IPO.

Stock Performance:

As of October 19, 2023, Hi-Green Carbon Limited's stock was trading at ₹140.30, showing a 2.86% increase. The stock had opened at ₹136.40, reached a high of ₹141.00, and a low of ₹126.05. The previous closing price stood at ₹136.40, with a total traded value of 3,48,800 shares.

Ownership Structure:

Before the IPO, the company had a pre-issue shareholding of 100.00%, which reduced to 71.83% post-issue.

Financial Insights:

Hi-Green Carbon Limited's financials revealed an impressive trajectory. As of March 31, 2023, the company's assets stood at ₹4,387.83 lakhs. It reported substantial revenue from operations, amounting to ₹7,903.90 lakhs for fiscal 2023. Notably, the company's profit after tax was significantly positive, reaching ₹1,084.78 lakhs. The company's net worth was ₹2,259.02 lakhs, with reserves and surplus at ₹359.02 lakhs. Total borrowings were reported at ₹1,362.19 lakhs.

Market Indicators:

Key performance indicators included a Price-to-Earnings (P/E) ratio of 13.13, Post P/E of 17.28, Market Capitalization of ₹187.43 crores, Return on Equity (ROE) of 63.19%, Return on Capital Employed (ROCE) of 64.70%, Debt/Equity ratio of 0.6, Earnings per Share (EPS) of ₹5.71, and Return on Net Worth (RoNW) of 48.02%.

Objectives of the Issue:

The proceeds from the Hi-Green Carbon IPO were planned for the following objectives:

1. Setting up a new Manufacturing Unit in Maharashtra.
2. Meeting Working Capital Requirements.
3. General Corporate Purposes.
4. Covering Public Issue Expenses.

Expert Opinion:

noted that the company operates in the renewable energy segment and is doubling its capacities. It is endeavoring to create wealth from waste and has posted impressive performance for FY22 and FY23. Given its exceptional earnings for FY23, the issue appears to be fully priced. Well-informed investors may consider parking moderate funds for medium to long-term rewards.

Subscription Status:

The Hi-Green Carbon IPO witnessed extraordinary interest from investors, with an overall subscription rate of 168.92 times as of September 25, 2023. Retail investors demonstrated robust enthusiasm with a subscription rate of 196.35 times. The issue also garnered significant interest from other investor categories, with a subscription rate of 69.95 times among QIBs and a remarkable 236.76 times among NIIs.

Conclusion:

The Hi-Green Carbon IPO offers investors an opportunity to engage in the renewable energy sector, capitalizing on the potential for recycling waste materials. However, prudent research is essential to assess the company's competitive positioning, long-term growth prospects, and financial stability. As with any investment, diversification and risk management remain fundamental principles in stock market participation.

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