Micropro Software IPO debuts -1.23%, triggers lower circuit.

Weak listing for Micropro Software Solutions IPO, then lower circuit

Micropro Software Solutions IPO had a flat to weak listing on 10th November 2023, listing at a discount of -1.23%. However, after a flat to weak opening, the stock closed the day at the 5% lower circuit over the listing price. For the day, the stock closed below the IPO issue price and also below the IPO listing price at the close of trading on 10th November 2023. The rather weak opening for the stock was despite the relatively moderate subscription numbers for the IPO when it had closed for subscription. However, the Nifty and Sensex were tepid to weak during most part of the day and that impacted the post listing stock performance, although the indices did eventually close in the positive. On 10th November 2023, the Nifty closed 30 points up while the Sensex closed 72 points higher. In the last few days, the Nifty has been volatile but has managed to hold the 19,400 mark during the week with some degree of conviction. Today, the Nifty closed above the 19,400 mark, but only just. The weakness, or the tepidness, in the Nifty and Sensex on 10th November 2023, was more on account of the sharp rally in the last few days after the Fed announced status quo on rates. The undertone of the market remained cautious.

Subscription levels, and how it impacted listing of Micropro Software IPO?

Let us now turn to the subscription story of Micropro Software Solutions Ltd. With modest to strong subscription of 49.08X for the retail portion, and 22.60X for the HNI / NII portion; the overall subscription was moderately strong at 36.88X. The IPO was a fixed price IPO issue with the IPO price brand set at ₹81 per share. The stock listed at a mildly negative premium of -1.23% on the NSE. However, subsequently, despite the stock opening with marginal weakness, it went on to close at the lower circuit of 5% on the listing price. This was reflective of pressure on the stock at any attempted bounce, on a day when overall market sentiments were volatile but cautious. The subscription normally impacts the price discovery in book building issues and the listing price. This being a fixed price IPO, there is no price discovery to be done. On the listing price front, the stock listed under pressure despite the relatively moderate to strong subscription levels. The stock opened for trading lower by -1.23% and eventually closed the day at the 5% lower circuit of the day.

Stock closes Day-1 at lower circuit, after a weak opening

Here is the pre-open price discovery for the Micropro Software Solutions IPO on the NSE.

Data Source: NSE

The SME IPO of Micropro Software Solutions Ltd was a fixed price issue priced at ₹81 per share. On 10th November 2023, the stock of Micropro Software Solutions Ltd listed on the NSE at a price of ₹80.00 per share, a discount of -1.23% on the IPO issue price of ₹81 per share. However, despite a volatile day post listing on 10th November 2023, the stock of Micropro Software Solutions Ltd closed exactly at the lower circuit price of ₹76.00 per share. The stock had an upper circuit limit of ₹80.80 for the day and a lower circuit limit of ₹76.00 for the day. In the midst of the volatility in trading during the day, the stock actually hit the upper circuit, but what is interesting is that the high price of the day was also lower than the IPO issue price. However, the stock eventually closed the day exactly at the lower circuit price. The closing price reflects a mixed day of trading, because it closed at the lower circuit after a flat to weak opening. At the close of the day, the stock ended -6.17% below the IPO issue price of ₹81 per share. The losses are not too deep, but what would sentimentally worry the traders is that the high price on listing day was below the IPO price of ₹81 per share. During the day, the stock as so volatile that it hit the upper circuit and the lower circuit during the day, before eventually closing the day for trade at lower circuit.

Being an SME IPO on the NSE, the stock of Micropro Software Solutions 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 at a marginal discount to the issue price. During the day, the stock made attempts to hit the upper circuit but stayed well below the upper circuit but the close was exactly at the lower circuit price. On the NSE, the stock of Micropro Software Solutions 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 Micropro Software Solutions IPO on listing day?

On Day-1 of listing i.e., on 10th November 2023, Micropro Software Solutions Ltd touched a high of ₹80.80 per share on the NSE and a low of ₹76.00 per share. The high price of the day was well below the upper circuit filter limit price of ₹84.00 per share, but the stock closed at the lower circuit price of ₹76.00 per share. Between these two extreme prices, the stock was relatively volatile and eventually closed at the lower circuit price of the day. In fact, the stock can be said to have enjoyed a moderate to flat listing, but the stock could not sustain amidst the selling pressure during the latter part of the day, leading to a lower circuit close for the stock.

For the whole of the day of listing, the stock of Micropro Software Solutions Ltd stayed well under the IPO issue price but essentially hovered below the listing price of the day on most occasions, even getting a little close to the lower circuit in the process and eventually closing at the lower circuit of the day. In terms of the circuit filter limits, the stock of Micropro Software Solutions Ltd had an upper circuit filter limit of ₹84.00 and a lower circuit band limit of ₹76.00. The stock closed the day -6.17% below the IPO issue price of ₹81 per share but it eventually closed 5% below the listing price of the day of ₹80.00 per share. During the day, the stock of Micropro Software Solutions Ltd got close to the upper circuit and touched the lower circuit price of the day before actually closing locked at lower circuit. The stock closed under pressure at the lower circuit at the close of the day with 14,400 sell quantity and no buyers 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 Micropro Software Solutions IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Micropro Software Solutions Ltd stock traded a total of 4.304 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹342.60 lakhs on the first day. The order book during the day showed a lot of volatility with the sell orders consistently exceeding the buy orders at any point of time post the moderate to weak listing in the morning. That also led the stock to close at the lower circuit of the day with pending sell orders at the end of the trading session, although the price was volatile during the day; hit the upper and the lower circuit during the day, before closing the day at the lower circuit. It must be noted here that Micropro Software Solutions 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, Micropro Software Solutions Ltd had a market capitalization of ₹108.68 crore with free-float market cap of ₹58.05 crore. It has a total of 142.99 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 4.304 lakh shares during the day is accounted by delivery trades only, barring some market trade exceptions in the market.