Canarys Automations IPO Listed at 40.16% higher, hits lower circuit

Premium listing for Canarys Automations Ltd, then hits lower circuit

Canarys Automations Ltd had a strong listing on 11th October 2023, listing at a premium of 40.16%, but subsequently the stock came under pressure and hit the -5% lower circuit on the listing price. Of course, the stock closed comfortably above the IPO issue price but it did close below the IPO listing price for the day. Overall, there was a sharp surge in the markets as the Nifty closed 122 points higher while the Sensex closed 394 points higher. However, despite these positive cues from the market over the last 2 days, the stock of Canarys Automation Ltd opened strong but later fell sharply to close at the -5% lower circuit for the day.

With subscription of 11.70X for the retail portion, 2.73X for the QIB portion and 14.29X for the HNI / NII portion; the overall subscription was modest at 9.94X. The IPO was a book building issue with the IPO price band in the range of ₹29 to ₹31. The price of the IPO was discovered at ₹31 per share. The stock listed at a strong premium of 40.16%, on a day when the market sentiments were extremely strong overall. However, subsequently, the stock could not hold on to the gains under selling pressure as the stock eventually closed at the lower circuit of -5%. The strong undertone of the market helped a strong listing, but the stock could not sustain is gains at higher prices.

Stock closes Day-1 at 5% lower circuit, despite a very strong start

Here is the pre-open price discovery for the Canarys Automations IPO on the NSE.

Data Source: NSE

The SME IPO of Canarys Automations Ltd was priced at the upper band of the IPO price range at ₹31 per share via the book building mode. On 11th October 2023, the stock of Canarys Automations Ltd listed on the NSE at a price of ₹43.45, a premium of 40.16% over the IPO issue price of ₹31. However, the stock could not hold on to the early gains and eventually it closed the day at a price of ₹41.30 which is 33.23% above the IPO issue price of ͭ₹31 per share and a full -5% below the listing price of the stock at ₹43.45 per share on the first day of listing. In a nutshell, the stock of Canarys Automations Ltd had closed the day exactly at the lower circuit price for the stock of -5% with only sellers and no buyers in the counter, despite a strong and robust opening. 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 actually turned out to be below the high price of the day, while the closing price was exactly at the low price of the day, being the -5% lower circuit limit for the day.

How prices traversed for Canarys Automations Ltd on listing day

On Day-1 of listing i.e., on 11th October 2023, Canarys Automations Ltd touched a high of ₹44.90 on the NSE and a low of ₹41.30 per share. The low price of the day was exactly the closing price of the stock while the stock high price of the day was tad above the opening price of the stock for the day. In other words, the stock opened a little below the highest point of the day and closed at the lowest point of the day, a typical sign of intraday weakness. The closing price of the day, or the low price of the day, also represents the lower circuit of -5%. That is the maximum that the SME IPO stock is allowed to move in the day, either ways. In fact, the stock enjoyed a strong listing but a close at the lower circuit on a day when the Nifty was up 122 points and the Sensex was up 394 points. The stock closed at the -5% lower circuit with 16,000 sell quantity and no buyers in the counter. For the SME IPOs, it may be recollected, that 5% is the upper limit and also the lower circuit on the listing price on the day of listing as they are listed on the Trade to Trade segment of BSE and the BE segment of the NSE.

Moderate volumes for Canarys Automations Ltd on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Canarys Automations Ltd stock traded a total of 45.04 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹1,929.06 lakhs on the first day.  That is substantially above the median volumes that SME IPOs on the NSE get to see on the listing day. The order book during the day showed a lot of selling post listing with the sell orders consistently exceeding the buy orders at any point of time. That also led the stock to close at the lower end of the circuit filter. It must be noted here that Canarys Automations 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, Canarys Automations Ltd had a market capitalization of ₹232.04 crore with free-float market cap of ₹100.79 crore. It has a total of 561.84 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 45.04 lakh shares during the day is accounted for only by delivery trades only, barring some market trade exceptions.