Madhusudan Masala IPO Listing Day Performance

Premium listing for Madhusudan Masala IPO, then hits lower circuit

Madhusudan Masala IPO had a strong listing on 26th September 2023, listing at a sharp premium of 71.43%, but subsequently losing ground and closing at the -5% lower circuit on the listing price. Of course, the stock still closed comfortably above the IPO issue price. In a sense, the markets came under pressure as the Nifty also gyrated during the day and eventually closed flat for the day. The weakness in the market was largely on account of the sharp fall in the Nifty in recent days with the Nifty falling below the 20,000 and the 19,800 support levels fairly sharply and with volumes. That is why, although the listing of the stock was at a smart premium of 71.43% over the IPO issue price, it could not sustain the gains for the day and closed at the lower circuit for the day.

The stock of Madhusudan Masala Ltd did show a lot of strength on opening and tried to hold higher. However, the pressure of the market overall was just too much to handle. The stock closed above the IPO issue price but it tapered below the listing price to close at the -5% lower circuit on the listing price of the stock. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Madhusudan Masala IPO opened 71.43% higher and the opening price turned out to be very close to the high price for the day. With subscription of 592.73X for the retail portion, 574.08X for the HNI / NII portion and 86.91X for the QIB portion; the overall subscription was extremely healthy at 444.27X. The subscription numbers were so strong that it allowed the discovery of the price of the IPO at the upper end of the band at ₹70 per share. In addition, it also allowed the stock to list at a huge premium of 71.43%, even on a day when the market sentiments were very weak. However, it could not sustain the gains for the day as the selling pressure on the market was quite strong.

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

Here is the pre-open price discovery for the Madhusudan Masala IPO on the NSE.

Data Source: NSE

Madhusudan Masala IPO was priced in the price band of ₹66 to ₹70 via the book building format and the price discovery happened at the upper end of the band due to the strong subscription numbers. On 26th September 2023, the stock of Madhusudan Masala Ltd listed on the NSE at a price of ₹120, a premium of 71.43% over the IPO issue price of ₹70. Not surprisingly, the price was discovered at the upper end of the band for the IPO. However, the stock faced pressure and could only traverse briefly above the listing price as it closed the day at a price of ₹114, which is 62.86% above the IPO issue price but it was a full -5% below the listing price of the stock on the first day of listing. In a nutshell, the stock of Madhusudan Masala Ltd had closed the day exactly at the lower circuit price for the stock of -5% with only sellers and no buyers. 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 very close to the high price of the day, while the closing price was the low price of the day.

How prices traversed for Madhusudan Masala IPO on listing day

On Day-1 of listing i.e., on 26th September 2023, Madhusudan Masala Ltd touched a high of ₹124 on the NSE and a low of ₹114 per share. The high price of the day was slightly above the opening price of the stock while the stock closed at the low point of the day, which also represents the lower circuit of -5%. Incidentally, the closing price represented the -5% lower circuit price of the stock for the day, which is the maximum that the SME IPO stock is allowed to move in the day, either ways. 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. The stock closed at the -5% lower circuit with 2,000 sell quantity and no buyers. 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 Madhusudan Masala IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Madhusudan Masala Ltd stock traded a total of 10.14 lakh shares on NSE SME segment amounting to value of ₹1,196.11 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. That also led the stock to close at the lower end of the circuit filter. It must be noted here that Madhusudan Masala 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, Madhusudan Masala Ltd had a market capitalization of ₹147.06 crore with free-float market cap of ₹38.77 crore. It has a total of 129 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 10.14 lakh shares during the day is accounted for only by delivery trades only.

Brief on the business model of Madhusudan Masala Ltd

Madhusudan Masala Ltd is an established company engaged in the manufacturing, processing, and marketing of more than 32 different types of spices (in Hindi Masala refer to spices). These spices are sold under the popular brand names of "DOUBLE HATHI" and "MAHARAJA". The company has two broad business verticals. The first vertical is Ground spices; which includes different varieties of chilli powder, turmeric powder, coriander powder, cumin powder etc. The second vertical is for blended spices and this segment includes the focused item-specific blends like garam masala, tea masala, chhole masala, sambhar masala, pav bhaji masala, Kitchen King Masala, Chicken Masala, Meat Masala etc. It also sells pounded masalas like dry ginger powder, black pepper powder, Amchur, etc.

The company has been promoted by Dayalji Kotecha, Vijaykumar Kotecha, Rishit Kotecha, and Hiren Kotecha. The promoter holding in the company currently stands at 100%. However, post the fresh issue of shares, the promoter equity shareholding will reduce to 73.64%. The fresh issue funds will be used by the company for meeting its working capital funding gaps and for general corporate expenses. Part of the monies raised will also go towards meeting the expenses of the issue. While Hem Securities Ltd will be the lead manager to the issue, KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is Hem Finlease Ltd.