Kundan Edifice IPO Listing Day Performance

Weak listing for Kundan Edifice IPO, but bounces to upper circuit

Kundan Edifice Ltd had a weak listing on 26th September 2023, listing at a sharp discount of -17.58%, but subsequently gaining ground to close at the 5% upper circuit of the day. The 5% upper circuit is calculated on the listing price of the stock on the day of IPO listing. Of course, the stock still below the IPO issue price. In a sense, the markets were flat for the second day in a row as the Nifty gyrated during the day but eventually closed flat with losses of just 10 points. The Nifty in recent days has fallen below the 20,000 and the 19,800 support levels. That is why, the listing of the stock was at a discount of -17.58% over the IPO issue price. However, the surge in buying in the counter led to the stock closing the day at the 5% upper circuit from the IPO listing price.

The stock of Kundan Edifice IPO showed a lot of weakness on opening but managed to collect itself and ended at the 5% upper circuit limit. The stock closed below the IPO issue price but above the listing price to close at 5% upper circuit on the listing price of the stock. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Kundan Edifice Ltd opened -17.58% lower and while the stock dipped lower during the day, it managed to collect itself to bounce back and recoup more than the fall and eventually closed at the upper circuit of 5% for the day. With subscription of 44.13X for the retail portion and 35.68X for the HNI / NII portion; the overall subscription was extremely healthy at 42.27X. The subscription numbers were so strong that it ensured that despite a weak listing in the bourses, the stock bounced sharply from lower levels to close 5% higher than the listing price. That is certainly appreciable on a day when the market sentiments were flat to weak. Despite the selling pressure in the markets, the stock bounced from the listing price.

Stock closes Day-1 at 5% upper circuit, despite weak listing

Here is the pre-open price discovery for the Kundan Edifice IPO on the NSE.

Data Source: NSE

The SME IPO of Kundan Edifice Ltd was priced at ₹91 per share, being a fixed price IPO. The price was already fixed and hence there was no price discovery needed. On 26th September 2023, the stock of Kundan Edifice Ltd listed on the NSE at a price of ₹75, a rather steep discount of -17.58% on the IPO issue price of ₹91. The stock faced pressure and even fell sharply below the listing price, but soon collected itself to bounce and close the day at ₹78.75 per share, the upper circuit level. The closing price of ₹78.75 is still -13.46% below the IPO issue price but 5% above the listing price of the stock on the first day of listing. In a nutshell, the stock of Kundan Edifice Ltd had closed the day exactly at the upper circuit price for the stock of 5% with only buyers and no sellers on the counter at the close of trading. 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 the mid-point between the low and high prices of the day, but the stock closed exactly at the upper circuit price of the day, which was also representative of the day high.

How prices traversed for Kundan Edifice IPO on listing day

On Day-1 of listing i.e., on 26th September 2023, Kundan Edifice Ltd touched a high of ₹78.75 on the NSE and a low of ₹71.25 per share. The high price of the day was exactly the closing price of the day as the stock closed at the upper circuit limit to the listing price. The opening price was mid-way between the opening price of the day and the closing price. The closing price also represents the upper circuit of 5%. The 5% threshold either ways is the circuit price of the stock for the day, which is the maximum that the SME IPO stock is allowed to move in the day. The sell-off in the stock is not surprising considering the volatility in the market and the tepid close of the Nifty at a flat level. However, what is eventually gratifying is that the stock closed at the 5% upper circuit with 1,200 buy quantity pending and no sellers. For the SME IPOs, 5% is the upper limit and also the lower circuit on the listing price on the day of listing.

Robust volumes for Kundan Edifice IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Kundan Edifice Ltd stock traded a total of 8.98 lakh shares on NSE SME segment amounting to value of ₹679.84 lakhs on the first day.  The order book during the day showed a lot of selling with the sell orders consistently exceeding the buy orders at any point of time. However, towards the close, it was the buying that dominated leading the stock to the upper circuit price. It must be noted here that Kundan Edifice Ltd is in the trade to trade (T2T) segment so only delivery trades are possible on the stock. Hence the entire volume of 8.98 lakh shares (barring some trade exceptions) for the day purely represents the delivery volumes.

At the close of Day-1 of listing, Kundan Edifice Ltd had a market capitalization of ₹80.89 crore with free-float market cap of ₹22.42 crore. It has a total of 102.72 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 8.98 lakh shares during the day is accounted for only by delivery trades.

Brief on the business model of Kundan Edifice Ltd

Kundan Edifice Ltd was incorporated in 2010 and it is engaged in the business of manufacturing, assembly and marketing of light emitting diodes (LED) strip lights. Kundan Edifice Ltd is actually a master designer and manufacturer and is classified as an ODM company or an Original Design Manufacturer company. It designs, develops, and also manufactures these LED light strips at its own facilities and then supplies it to other client companies. Then, these companies distribute under their own brands and many of the large brands also avail the services of Kundan Edifice Ltd. In addition, Kundal Edifice Ltd also provides specialized customized products like HV(high voltage) Flex, LV (low voltage) flex, RGB Flex and the complete accessories kit. Kundan Edifice Ltd has two manufacturing and assembly facilities located at Vasai and Bhiwandi in the state of Maharashtra. The company employs over 270 workers in its factories, which includes contract workers.

The company has been promoted by Divyansh Gupta and Vijaya Gupta while Mallika Gupta and Shubhang Gupta are also part of the promoter group. The promoter holding (including the promoter group) in the company currently stands at 99%. However, post the fresh issue of shares and the IPO, the promoter equity holding share will be diluted. The fresh issue funds will be used by the company for meeting the incremental working capital needs as well as for general corporate purposes. Part of the funds raised will also go towards meeting issue expenses. While Fedex Securities Private Ltd will be the lead manager to the issue, Cameo Corporate Services Ltd will be the registrar to the issue. The market maker for the issue is Gretex Share Broking Ltd.