Aztec Fluids & Machinery IPO: Lists 34.33% higher, hits lower circuit

Strong listing for Aztec Fluids & Machinery Ltd, then lower circuit

Aztec Fluids & Machinery Ltd had a very strong listing on 17th May 2024, listing at a premium of 34.33%. After a modest opening, the stock closed the day at the -5% lower circuit on the listing price. For the day, the stock closed above the IPO issue price but below the IPO listing price at the close of trading on 17th May 2024. What also stood out about the stock was the strong listing despite the volatile overall market sentiments; leading to the failure of the stock to hold on to its listing gains. For the day, the Nifty closed 62 points higher, while the Sensex closed a full 253 points higher. The negative sentiments in the early part of the trading day just happened to restrict the stock price performance of Aztec Fluids & Machinery Ltd on listing day, as it closed at lower circuit despite a strong start. Ironically, the overall market had recovered from lower levels to close higher for the day.

Subscription and price performance of Aztec Fluids & Machinery Ltd on listing day

Let us now turn to the subscription story of Aztec Fluids & Machinery IPO. With robust subscription of 228.43X for the retail portion, and 341.94X for the HNI / NII portion; the overall subscription was modestly strong at 218.38X. Even the QIB portion of the IPO got subscribed at 107.93X. The IPO was a book built IPO with a price band of ₹63 to ₹67 per share. Being a book built price issue, the price discovery happened at the upper end of the price band, considering the robust subscriptions for the IPO of Aztec Fluids & Machinery Ltd.

Despite a strong listing on 17th May 2024, the stock went on to close the day at the lower circuit. Incidentally, the listing price of ₹90 per share also turned out to be the high price of the day. The stock never crossed the listing price, leave alone getting close to the upper circuit price of the day. This was reflective of weakness in the stock post listing, amidst the volatile market sentiments in the early part of the day. However, such strength could not be sustained as the stock ended the day at the lower circuit for the day. The subscription impacts the price discovery in 3 ways. Firstly, the robust subscription ensured that the price of the IPO get discovered at the upper end of the price band at ₹67 per share. Secondly, the strong subscription ensured that the stock price listing was at a premium of 34.33% to the issue price. Thirdly, due to the negative bouts of volatility in the markets, the stock closed at the -5% lower circuit for the day. This is despite strong subscription numbers and a very strong listing start to the stock on listing day on 17th May 2024.

Stock closes Day-1 at lower circuit, after a strong listing start

Here is the pre-open price discovery for the SME IPO of Aztec Fluids & Machinery Ltd on the BSE.

Data Source: BSE

The SME IPO of Aztec Fluids & Machinery Ltd was a book built IPO priced at the upper band price of ₹67 per share. On 17th May 2024, the stock of Aztec Fluids & Machinery Ltd listed on the BSE at a price of ₹90 per share, a premium of 34.33% over the IPO issue price of ₹67. However, despite a volatile day post listing on 17th May 2024, the stock of Aztec Fluids & Machinery Ltd closed exactly at the lower circuit price of ₹85.50 per share on the BSE SME segment. The stock had an upper circuit limit of ₹94.50 for the day and a lower circuit limit of ₹85.50 per share for the day. In the midst of the volatility in trading during the day, the stock never crossed above the listing price, leave alone getting close to the upper circuit price of the day. All day, it remained below the listing price, eventually closing at the -5% lower circuit price of the day. The stock showed weakness after a strong listing and closed at the lower circuit price of -5%.

The closing price reflects a modestly weak day of trading, because it closed at the lower circuit despite opening strong and listing at a healthy premium of 34.33% to the issue price. Also, the lower circuit comes on top of 34.33% premium listing of the stock. As a result, the closing price of the stock of Aztec Fluids & Machinery Ltd was still a full 27.61% above the issue price at the close of the first day of listing on the BSE SME segment. This can be called a reasonable listing show, especially considering that the stock had shown signs of volatility in the morning. However, the lower circuit on listing day does dampen the sentiments surrounding the stock.

Listed in the BSE MT segment for trade in T2T

Being an SME IPO on the BSE, the stock of Aztec Fluids & Machinery Ltd was subjected to 5% circuit filter on listing day and was also in the MT (trade to trade) segment. That means, only delivery trades are permitted on the stock. Like the upper circuit price, even the lower circuit price on listing day is calculated on the listing price and not on the IPO price. It is 5% either ways. The low price of the day was exactly the closing price and that was also the lower circuit for the day. However, during the day, the stock faced resistance at the listing price and never got above that, leave alone getting close to the upper circuit price.

On the BSE, the stock of Aztec Fluids & Machinery Ltd has been admitted to trade in the MT category. The MT category is specifically for the SME segment of the BSE with compulsory trade to trade settlement. On such stocks, netting of positions is not permitted and every trade has to be settled by delivery only. However, such stocks continue to trade either in T+1 or T+2 settlement cycles. The stock of Aztec Fluids & Machinery Ltd will be trading in the T+1 rolling settlement cycle.

How prices traversed for Aztec Fluids & Machinery Ltd on listing day

On Day-1 of listing i.e., on 17th May 2024, Aztec Fluids & Machinery Ltd touched a high of ₹90.00 per share on the BSE and a low of ₹85.50 per share. The high price of the day was well short of the upper circuit limit price of the stock while the stock low price of the day was exactly the lower circuit price, and well below the listing circuit of the day. Between these two prices, the stock was relatively volatile and eventually closed at the lower circuit price of the day. In fact, the stock can be said to have enjoyed a strong listing despite a volatile performance for the day by the Nifty and Sensex. Aztec Fluids & Machinery Ltd closed at -5% lower circuit despite getting a strong opening on listing day on the BSE. It is a BSE-SME IPO.

During the trading day, the stock of Aztec Fluids & Machinery Ltd opened well above the issue price but closed at the lower circuit price of the day. In terms of the circuit filter limits, the stock of Aztec Fluids & Machinery Ltd had an upper circuit filter limit of ₹94.50 per share and a lower circuit band limit of ₹85.50 per share. The stock closed the day 27.61% above the IPO issue price of ₹67 per share but it also closed -5% below the listing price of the day at ₹90 per share. During the day, the stock of Aztec Fluids & Machinery Ltd never crossed above the listing price, leave alone getting close to the upper circuit but then gravitated towards the lower circuit and stayed locked in the lower circuit for better part of the day. The stock closed weak after a strong opening. It closed at the lower circuit with unmet sell quantity and no buyers in the counter. For the SME IPOs on the BSE, 5% is the upper limit and also the lower circuit on the listing price.

Strong volumes for Aztec Fluids & Machinery Ltd on listing day

Let us now turn to the volumes of the stock on the BSE. On Day-1 of listing, the Aztec Fluids & Machinery Ltd stock traded a total of 11.02 lakh shares on BSE SME segment amounting to trading value (turnover) of ₹977 lakhs on the first day. The order book during the day showed a lot of selling after listing with the sell orders consistently exceeding the buy orders at any point of time. That also led the stock to close with pending sell orders (unmet) at the end of the trading session. It must be noted here that Aztec Fluids & Machinery Ltd is in the trade to trade (T2T) segment so only delivery trades are possible on the stock. Hence the entire volume for the day purely represents the delivery volumes, barring some minor shifts for error trades adjustment.

At the close of Day-1 of listing, Aztec Fluids & Machinery Ltd had a market capitalization of ₹116.28 crore with free-float market cap of ₹22.09 crore. As stated earlier, since the trading is on the T2T segment (MT segment of BSE), the entire volume of 11.02 lakh shares during the day is accounted by delivery trades only, barring some error trade exceptions in the market. The stock trades on the BSE SME segment under the trading code (544177) and will be available in the demat account under ISIN code (INE0SCB01016). The stock has a face value of ₹10 per share.

IPO size to Market cap contribution ratio

One way to assess the significance of the IPO on the market cap of the segment is the ratio of market cap overall to the IPO size. Aztec Fluids & Machinery Ltd had a market cap of ₹116.28 crore and the issue size was ₹24.12 crore. Therefore, the Market cap contribution ratio of the IPO works out to 6.75 times; which is slightly higher than the median for BSE-SME IPOs. Remember, this is not the ratio of the market cap to original book value, but the ratio of the market cap created to the size of the IPO. That shows the significance of the IPO to the overall market cap accretion of the stock exchange.