Deem Roll Tech IPO Lists 55.04% higher, hits upper circuit

Strong listing for Deem Roll Tech IPO, then upper circuit

Deem Roll Tech IPO had a real bumper listing on 27th February 2024, listing at a premium of 55.04%. After a strong  opening, the stock closed the day at the 5% upper circuit over the listing price. For the day, the stock closed comfortably above the IPO issue price and the IPO listing price at the close of trading on 27th February 2024. What also stood out about the stock was the bumper listing amidst some able market support. In fact, on the day, the Nifty got a bump up by 76 points while the Sensex rallied by a full 305 points. In the last few days, the Nifty has been volatile but has managed to hold the 22,100 mark during the week and that is what matters to the market.

However, markets did show some signs of weakness today as traders rushed to book profits ahead of the key data feeds towards the end of the month. There is the all-important India data points expected this week. The GDP number for the third quarter and the second estimate for full year GDP this week. There is also the core sector growth numbers and the monthly update for fiscal deficit that will get updated as of the end of January 2024. Ini terms of global data flows, the US Bureau of Economic Analysis (BEA) will announce the second estimate of fourth quarter GDP for the US economy. A day later, the US BEA will also announce the PCE inflation data, a key input for the Fed to formulate its monetary policy.

Subscription and price performance of Deem Roll Tech IPO on listing day

Let us now turn to the subscription story of Deem Roll Tech IPO. With robust subscription of 180.50X for the retail portion, and 311.95X for the HNI / NII portion; the overall subscription was extremely healthy at 256.55X. The IPO was a fixed price IPO issue with the IPO price band set at ₹129  per share. However, being a fixed price issue, there was no question of price discovery in this case. The solid subscription numbers ensured that the stock listed and, in addition, also managed to close at the 5% upper circuit of the day.

Despite the stock seeing some volatility in the early parts of the day, it went on to close at the upper circuit of 5% over the listing price. This was reflective of strength in the stock amidst the volatile market sentiments. The subscription normally impacts the price discovery in book building issues and the listing price. In a fixed price issue, there is no question of price discovery, so the strong subscription numbers eventually helped the stock  in 2 ways. Firstly, it led to the stock price listing at a robust premium to the issue price. Secondly, despite the market volatility, the stock managed to close at the 5% upper circuit for the day; a sign of inherent strength.

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

Here is the pre-open price discovery for the SME IPO of Deem Roll Tech IPO on the NSE.

Data Source: NSE

The SME IPO of Deem Roll Tech Ltd was a fixed price IPO and priced at ₹129 per share. On 27th February 2024, the stock of Deem Roll Tech Ltd listed on the NSE at a price of ₹200 per share, a premium of 55.04% over the IPO issue price of ₹129 per share. However, despite a volatile day post listing on 27th February 2024, the stock of Deem Roll Tech Ltd closed exactly at the upper circuit price of ₹210 per share on the NSE SME segment. The stock had an upper circuit limit of ₹210 for the day and a lower circuit limit of ₹190 per share for the day. In the midst of the volatility in trading during the day, the stock hit the upper circuit but stayed put at the upper circuit price for the better part of the day. However, the stock also touched the lower circuit price during the day before eventually bouncing back sharply.

During the day, the stock did display a high level of volatility as it, both the lower circuit and upper circuit of the day. It is a different matter that the stock eventually got locked at the upper circuit of the day. The stock price, during the day touched the lower circuit of ₹190 and also the upper circuit price of ₹210 per share during the listing day on 27th February 2024. The stock showed a smart bounce from listing levels as it spent better part of the day locked in upper circuit only.

The closing price reflects a strong day of trading, because it closed at the upper circuit despite the stock even touching the lower circuit briefly in the earlier part of trading in the day. One must remember that, the upper circuit comes on top of a 55.04% premium listing of the stock, which is definitely appreciable, although it must be said that the market support was also there on the day. On the day of listing of the stock of Deem Roll Tech Ltd, the Nifty had gained 76 points while Sensex was up by 305 points on the day. Overall, the closing price of the stock of Deem Roll Tech Ltd was a full 62.79% above the issue price on the first day of the stock listing on the NSE SME segment.

Listed in the ST segment for trade in T2T

Being an SME IPO on the NSE, the stock of Deem Roll Tech Ltd was subjected to 5% circuit filter on listing day and was also in the ST (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. The opening price of the day was exactly at the low price of the day, meaning the stock never really dipped below the listing price and spent most part of the day at the upper circuit, locked in.

During the day, the stock hit the upper circuit but also briefly touched the lower circuit, although the eventual close of the day was exactly at the upper circuit price. In fact, the stock not only went below the listing price of the day, but also touched the lower circuit price of the day and stayed there for some time before bouncing back. On the NSE, the stock of Deem Roll Tech 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 Deem Roll Tech IPO on listing day

On Day-1 of listing i.e., on 27th February 2024, Deem Roll Tech Ltd touched a high of ₹210 per share on the NSE and a low of ₹190 per share; after listing exactly at ₹200 per share. The high price of the day was exactly the upper circuit limit price of the stock while the stock low price of the day was exactly at the lower circuit price of the day. Between these two extreme prices, the stock was relatively less volatile and eventually closed at the upper circuit price of the day. In fact, the stock can be said to have enjoyed a strong listing and a lot of resilience during the day. There was some support from the markets on the listing day with the Nifty gaining by 76 points and the Sensex gaining by 305 points during the day. The stock of Deem Roll Tech Ltd closed at 5% upper circuit on top of a premium listing on the NSE; and this is despite a brief dalliance with the lower circuit of the day.

During the trading day, the stock went below the listing price of ₹200 per share, and also touched the lower circuit price of ₹190 per share, albeit for a brief lock. The stock quickly bounced and got locked into the upper circuit price of the day. In terms of the circuit filter limits, the stock of Deem Roll Tech Ltd had an upper circuit filter limit of ₹210 and a lower circuit band limit of ₹190. The stock closed the day 62.79% above the IPO issue price of ₹129 per share and it also closed 5% above the listing price of the day at ₹200 per share. During the day, the stock of Deem Roll Tech Ltd hit the upper circuit and stayed locked in the upper circuit for most part of the day. However, it had also showed weakness in the early part of the day to touch the lower circuit, before bouncing back sharply. The stock closed strong at the upper circuit at the close of the day with only buy quantity and no sellers 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.

Robust volumes for Deem Roll Tech IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Deem Roll Tech Ltd stock traded a total of 16.70 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹3,341.84 lakhs on the first day. The order book during the day showed a lot of buying with the buy orders consistently exceeding the sell orders at any point of time. That also led the stock to close with pending buy orders at the end of the trading session, although the price was very volatile during the day; gyrating between the lower circuit and the upper circuit. It must be noted here that Deem Roll Tech 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, Deem Roll Tech Ltd had a market capitalization of ₹175.08 crore with free-float market cap of ₹57.57 crore. It has a total of 83.37 lakh shares as the issued capital of the company with a face value of ₹10 per share. As stated earlier, since the trading is on the T2T segment, the entire volume of 16.70 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 (DEEM) and will be available in the demat account under ISIN code (INE586O01011).

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. Deem Roll Tech Ltd had a market cap of ₹175.08 crore and the issue size was ₹29.26 crore. Therefore, the Market cap contribution ratio of the IPO works out to 5.98 times; which is higher than the median. 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.