HMA Agro Industries IPO lists at 6.84% premium, but closes lower

HMA Agro Industries IPO had a strong listing on 04th July 2023, listing at a premium of 6.84% on the NSE but closed below the IPO price. One can almost say that the stock had select a robust trading day to list as the Nifty was up 65 points and the Sensex was up a good 274 points on Tuesday. While the stock did show some bouts of volatility during the day, it closed lower after opening at a premium to the IPO price on the listing day. The stock of HMA Agro Industries closed below the IPO price and well below the listing price. With subscription of just about 1.62X  overall and QIB subscription at 1.74X, the listing was expected to be moderate, at the very best and the pressure was visible despite a smart start. Here is the HMA Agro Industries Ltd listing story on 04th July 2023.

HMA Agro Industries IPO price was fixed at the upper end of the band at ₹585 which was anyways rather ambitious considering the rather moderate 1.62X overall subscription and the 1.74X QIB subscription in the IPO. In addition, the retail portion had been undersubscribed getting just about 0.96% response to its quota in the IPO. The price band for the IPO was ₹555 to ₹585. On 04th July 2023, the stock of HMA Agro Industries Ltd listed on the NSE at a price of ₹625, a premium of 6.84% on the IPO issue price of ₹585. On the BSE also, the stock listed at ₹615, a premium of 5.13% over the IPO price. Below is the summary of the pre-open session.

On the NSE, HMA Agro Industries Ltd however closed on 04th July 2023 at a price of ₹579.20. That is a first day closing discount of -0.99% on the issue price of ₹585 but at a discount of -7.33% on the listing price of ₹625. In fact, the listing price did act as the support for the stock for a long time but in the end the selling pressure on the stock led it to crumble. On the BSE, the stock closed at ₹584.75. That represents a first day closing discount of -0.04% below the issue price and also a discount of -4.92% below the listing price on the BSE at ₹615 per share.

On both the exchanges, the stock listed at a premium to the issue price but closed the day at a discount to the issue price and also to listing price. The high of the day on NSE was as high as ₹667 but it could not hold on to higher levels. Clearly, the tepid subscription took its toll on the first day of listing as there was a rush to exit the stock after the relatively strong opening. Despite the Nifty and the Sensex in the positive, it was the internal conflicts of the business model and the weak subscription that took its toll on the listing day,

On Day-1 of listing, HMA Agro Industries Ltd touched a high of ₹667 on the NSE and a low of ₹570. The stock was extremely volatile during the day and if you look at the range of prices on the NSE, it has oscillated from ₹667 on the upper side to ₹570 on the lower side; an oscillation of nearly ₹97 during the day. The fall was exacerbated by the fact that after a positive opening the markets did give up some of its gains in the last hour of trading. On Day-1 of listing, the HMA Agro Industries Ltd stock traded a total of 52.33 lakh shares on NSE amounting to value of ₹324.25 crore on the first day.  The order book during the day showed a lot of selling in the latter part of the day with the sell orders far exceeding the buy orders at any point of time. The pressure virtually got accentuated in the last hour or so. The stock closed with open sell orders to the tune of nearly 86,125 shares.

Let us turn to the BSE. On Day-1 of listing, HMA Agro Industries Ltd touched a high of ₹670.45 on the BSE and a low of ₹570. The stock was extremely volatile during the day and if you look at the range of prices on the NSE, it has oscillated from ₹670.45 on the upper side to ₹570 on the lower side; an oscillation of nearly ₹107.45 during the day. The fall was exacerbated by the fact that after a positive opening the markets did give up some of its gains in the last hour of trading. On Day-1 of listing, the HMA Agro Industries Ltd stock traded a total of 4.09 lakh shares on BSE amounting to value of ₹25.44 crore on the first day.  The order book during the day showed a lot of selling in the latter part of the day with the sell orders far exceeding the buy orders at any point of time. The pressure virtually got accentuated in the last hour or so.

On the NSE, out of the total 52.33 lakh shares traded during the first day of trading, the deliverable quantity represented 25.27 lakh shares or a deliverable percentage of 48.29% on the NSE. That shows a lot of delivery selling. Even on the BSE, out of the total 4.09 lakh shares of quantity traded, the deliverable quantity at a gross across client level was 1.86 lakh shares representing total deliverable percentage of 45.52%. At the close of Day-1 of listing, HMA Agro Industries Ltd had a market capitalization of ₹2,928.25 crore with free-float market cap of ₹322.11 crore.

Here is a quick background on the company. HMA Agro Industries Ltd was incorporated in 2008 as a star export house to deal in food trade. It handles a variety of agricultural product exports including the predominant exports of frozen fresh de-glanded buffalo meat. HMA Agro Industries Ltd also exports frozen natural products, vegetables, and cereals. The company alone accounts for over 10% of the frozen buffalo meat products from India and reaches out to over 40 countries globally.

HMA Agro Industries has its own meat processing plants in India at different locations like Aligarh, Mohali, Agra, and Parbhani. It is also foraying into another fully integrated meat product processing unit in Haryana; apart from inorganic plans. Its total in-house meat product processing capacity is over 400,000 metric tons per year and the company is a government recognized Star Export House.