Fonebox IPO Lists 185.71% higher, hits upper circuit

Bumper listing for Fonebox Retail Ltd, then upper circuit

Fonebox Retail IPO had a real bumper listing on 02nd February 2024, listing at a premium of 185.71%. 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 02nd February 2024. In a sense, the bumper listing was also supported by the robust performance of the Nifty and the Sensex. On 02nd February 2024 the Nifty index closed +156 point higher and the Sensex closed +440 points higher. In the last few days, the Nifty has been volatile but has managed to hold the 21,500 mark during the week and that is what matters to the market.

However, markets did show some signs of weakness today in the second half as traders rushed to book profits ahead of the monetary policy announcement next week and the need to stay light over the weekend. It must be admitted that the investors are generally turning slightly cautious after the big rally in the markets, especially the frenetic rally over the last quarter of 2024. However, the low VIX has ensured that any corrections will be used by traders to buy at lower levels. A lot will depend on how the RBI reacts in its monetary policy and how the other data points like inflation and IIP pan out in coming weeks.

Subscription and price performance of Fonebox Retail Ltd on listing day

Let us now turn to the subscription story of Fonebox Retail Ltd. With robust subscription of 886.32X for the retail portion, 138.69X for the QIB portion, and 819.99X for the HNI / NII portion; the overall subscription was extremely healthy at 659.42X. The IPO was a book building IPO issue with the IPO price band set in the range of ₹66 to ₹70  per share. Being a book built issue and getting such solid subscription numbers, the stock obviously ended up being priced at the upper end of the price band. The stock listed at a strong premium of 185.71% on the NSE SME segment.

However, subsequently, 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. The strong subscription had a positive impact on the ability of the stock  in 3 ways. Firstly, it ensured that the price discovery of the book built issuer happened at the upper end of the price band. Secondly, it led to the stock price listing at a robust premium to the issue price. Thirdly, despite the pressure on the overall market, the stock managed to close at the 5% upper circuit for the day, which is a sign of inherent strength in the stock.

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

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

Data Source: NSE

The SME IPO of Fonebox Retail Ltd was a book built IPO and priced at ₹70 per share; which is the upper end of the price band of the IPO. On 02nd February 2024, the stock of Fonebox Retail Ltd listed on the NSE at a price of ₹200 per share, a premium of 185.71% over the IPO issue price of ₹70. However, despite a volatile day post listing on 02nd February 2024, the stock of Fonebox Retail 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 and even hit the lower circuit of the day, before settling at the upper circuit for the day, where it got locked in.

During the day, the stock went below the listing price of the day, and even touched the lower circuit price of ₹190 per share during the day. The stock touched the lower circuit price of the day. However, after hitting the lower circuit price for the day, the stock showed a smart bounce and eventually 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 and this was despite the stock even briefly touching the lower circuit price of the day. Also, the upper circuit comes on top of a 185.71% premium listing of the stock, is appreciable, although it was also supported by a strong performance by the rally in the Nifty and the Sensex during the day. For the day, the Nifty closed with gains of 156 points while Sensex closed the day with gains of 440 points on the day. Overall, the closing price of the stock of Fonebox Retail Ltd was a full 200% 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 Fonebox Retail 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 mid-point price of the day, meaning the stock even dipped below the listing price and touched down on the lower circuit, but eventually bounced back to the upper circuit, where it eventually spent most of the day.

During the day, the stock hit the upper circuit but also briefly touched the lower circuit price of the day. In fact, the stock actually dipped below the listing price but bounced well above the lower circuit price of the day to spend most of the day at the upper circuit price. On the NSE, the stock of Fonebox Retail 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 Fonebox Retail Ltd on listing day

On Day-1 of listing i.e., on 02nd February 2024, Fonebox Retail Ltd touched a high of ₹210 per share on the NSE and a low of ₹190 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 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 supported by the Nifty gained by 156 points and the Sensex gaining by 440 points during the day. For the day, the stock of Fonebox Retail Ltd closed at 5% upper circuit on top of a premium listing on the NSE.

During the trading day, the stock went below the listing price of ₹200 per share, towards the low price of the day at ₹190 per share. 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 Fonebox Retail Ltd had an upper circuit filter limit of ₹220 and a lower circuit band limit of ₹190. The stock closed the day 200% above the IPO issue price of ₹70 per share and it also closed 5% above the listing price of the day at ₹210 per share. During the day, the stock of Fonebox Retail Ltd hit the upper circuit and stayed locked in the upper circuit for most part of the day. However, it also dipped below the listing price briefly touched the lower circuit of the day. The stock closed strong at the upper circuit at the close of the day with 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 Fonebox Retail Ltd on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Fonebox Retail Ltd stock traded a total of 15.78 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹3,151.74 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 hardly volatile during the day. It must be noted here that Fonebox Retail 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, Fonebox Retail Ltd had a market capitalization of ₹215.46 crore with free-float market cap of ₹61.10 crore. It has a total of 102.60 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 15.78 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 (FONEBOX) and will be available in the demat account under ISIN code (INE0Q4701019).

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. Fonebox Retail Ltd had a market cap of ₹215.46 crore and the issue size was ₹20.37 crore. Therefore, the Market cap contribution ratio of the IPO works out to 10.52 times; which is significantly 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.