Baweja Studios IPO Lists 1.67% higher, but closes at -5% lower circuit

Flat listing for Baweja Studios IPO, then lower circuit

Baweja Studios IPO had a flat listing on the NSE, listing at ₹183 per share; a marginal premium of 1.67% to the issue price of ₹180 per share on 06th February 2024. However, after a bumper opening, the stock struggled under the selling pressure and closed the day at the -5% lower circuit on the listing price. Due to the lower circuit on the stock after a flat listing during the day, the stock of Baweja Studios Ltd closed at a discount to the listing price and the issue price too. The closing price of ₹173.85 represented a loss of -5% on the listing price of ₹183 per share, while it represented a loss of -3.42% over the IPO issue price of ₹180 per share.

Despite the strong performance of the Nifty and the Sensex on listing day, the selling pressure meant that the stock of Baweja Studios could not sustain at higher levels. As a result, the stock of Baweja Studios IPO still closed at the -5% lower circuit at the close of 06th February 2024. It must be noted here that the Nifty and Sensex had actually closed in the positive on 06th February 2024. In fact, the Nifty gained 158 points in the day and the Sensex gained 455 points in the day. During the day, the Nifty and the Sensex were volatile but later bounced to back to close with smart gains. Unfortunately, the rich pricing of the IPO and the tepid subscription meant that the stock of Baweja Studios closed at a discount, even on a day when the indices were robust.

Influence of Nifty and Sensex on IPO listing performance

On 06th February 2024, the Nifty closed 158 points higher while the Sensex closed 455 points higher as there was a bounced seen in the markets after bouts of volatility. The markets, in the last few days have oscillated between strength and weakness, although the underlying trend has been fairly strong. The markets have just seen a positive interim budget and a less dovish Fed policy. In this week, the all important RBI policy is also likely to be announced, where the focus is likely to be more on liquidity than on rates. Overall, the markets are likely to be rangebound with a positive bias. The performance of the IPOs would, therefore, largely predicate on individual merits like the pricing, quality of the issue and the subscription levels.

Tepid subscription impacts listing performance of Baweja Studios Ltd

Let us now turn to the subscription story of Baweja Studios Ltd. With tepid subscription of 4.20X for the retail portion, 2.17X for the QIB portion and 1.08X for the non-retail HNI / NII portion; the overall subscription was extremely tepid at 2.62X. The IPO was a book building issue with the IPO price band fixed in the range of ₹170 per share to ₹180 per share. Being a book built issue, it was hardly surprising that the price discovery happened at the upper end of the band at ₹180 per share, since that was the price at which the anchor was also done. The stock listed with gains of just 1.67% on the NSE. However, subsequently, due to the tepid subscription and due to the general doubts over the pricing, the stock of Baweja Studios Ltd went on to close at the lower circuit of -5% on 06th February 2024.

This was reflective of pressure on the stock at higher levels, on a day when overall market sentiments were fairly strong. The subscription normally impacts the price discovery in book building issues and the listing price. The strong subscription had a positive impact on the ability of the stock  in two ways. Firstly, it led to the stock price getting discovered at the upper end of the band; and that was the case here as the price got discovered at the upper band of ₹180 per share. On the day of listing, the stock managed to get a positive opening, albeit of just about 1.67% over the IPO issue price of ₹180 per share. However, eventually, the stock went on to close the day at the -5% lower circuit on the listing price of ₹183 per share. The stock closed the day at ₹173.85 per share.

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

Here is the pre-open price discovery for the SME IPO of Baweja Studios Ltd on the NSE.

Data Source: NSE

The SME IPO of Baweja Studios Ltd was a book built issue priced at the upper band of ₹180 per share. On 06th February 2024, the stock of Baweja Studios Ltd listed on the NSE at a price of ₹183 per share, which is a marginal premium of 1.67% over the IPO price. However, amidst a volatile day post listing on 06th February 2024, the stock of Baweja Studios Ltd closed exactly at the lower circuit price of ₹173.85 per share. The stock had an upper circuit limit of ₹192.15 per share for the day and a lower circuit limit of ₹173.85 per share for the day of listing i.e., 06th February 2024.

In the midst of the volatility in trading during the day, the stock price never really managed to go above the listing price of ₹183 per share, which was also the high price of the day. The stock spent most of the day below the issue price before closing at the lower circuit level on 06th February 2024. In fact, the stock was locked in the lower circuit for most part of the day. The closing price reflects a mixed day of trading, because it closed at the lower circuit after a positive opening for the day and after staying below the listing price during most of the trading session. However, this lower circuit comes after positive listing on a day when the Nifty and the Sensex closed with gains of 158 points and 455 points respectively.

Trade to Trade (ST) category SME listing

Being an SME IPO on the NSE, the stock of Baweja Studios Ltd was subjected to 5% circuit filter either side on listing day and was also placed in the ST (trade to trade) segment, specifically for SME stocks. 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. The opening price of the day was at a marginal premium of 1.67% over the issue price of ₹180 per share.

During the day, the stock was volatile at opening but never really seriously got to stay above the listing price and remained under that price, eventually closing at the lower circuit price. In fact, the stock was locked in lower circuit for most part of the day on 06th February 2024. On the NSE, the stock of Baweja Studios Ltd has been admitted to trade in the ST category. The ST category is specifically for the SME Emerge segment of the NSE 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.

How prices traversed for Baweja Studios Ltd on listing day

On Day-1 of listing i.e., on 06th February 2024, Baweja Studios Ltd touched a high of ₹183 per share on the NSE and a low of ₹173.85 per share. The high price of the day was exactly the listing price of ₹183 per share but for most part of the day the stock stayed below the listing price. The high price was well short of the upper circuit price of ₹192.15 per share. However,  the stock closed at the lower circuit price of ₹173.85 per share. Between these two extreme prices, the stock was volatile before closing at the lower circuit price.

In terms of the circuit filter limits, the stock of Baweja Studios Ltd had an upper circuit filter limit of ₹192.15 and a lower circuit band limit of ₹173.85. The stock closed the day -3.42% below the IPO issue price of ₹180 per share but the stock closed -5% below the listing price of ₹183 for the day. However, the stock touched lower circuit price of the day early and spent most part of the day locked at lower circuit. The stock closed under pressure at the lower circuit at close with sell quantity of 4,800  shares and no buyers. For SME IPOs, 5% is the upper limit and also the lower circuit limit on the listing price on the day of listing.

Robust volumes for Baweja Studios Ltd on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Baweja Studios Ltd stock traded a total of 9.60 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹1,736.93 lakhs on the first day. The order book during the day showed a lot of volatility with the sell orders consistently exceeding the buy orders at any point of time post the bumper listing. That also led the stock to close at the lower circuit of the day with pending sell orders of 4,800 shares at the end of the trading session, although the price was volatile during the day. It must be noted here that Baweja Studios 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.

At the close of Day-1 of listing, Baweja Studios Ltd had a market capitalization of ₹320.35 crore with free-float market cap of ₹93.86 crore. It has a total of 184.27 lakh shares as the issued capital of the company and a face value of ₹10 per share. As stated earlier, since the trading is on the T2T segment, the entire volume of 9.60 lakh shares during the day is accounted by delivery trades only, barring some market trade exceptions in the market. The stock trades on the NSE SME segment under the trading code (BAWEJA) and will be available in the demat account under ISIN code (INE0JFJ01011).

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 overall to the IPO size. Baweja Studios Ltd had a market cap of ₹320.35 crore and the issue size was ₹97.20 crore. Therefore, the Market cap contribution ratio of the IPO works out to a rather tepid 3.30 times. 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.