Ramdevbaba Solvent IPO Listed with 31.76% Premium, Triggers Upper Circuit

Strong listing for Ramdevbaba Solvent Ltd, then upper circuit

Ramdevbaba Solvent IPO had a real strong listing on 23rd April 2024, listing at a premium of 31.76%. 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 23rd April 2024. What also stood out about the stock was the robustly strong listing even in the midst of a highly volatile and oscillating market. In fact, on the day, the Nifty may have closed 32 points higher, but it was after a lot of wild swings in the market. In the last few days, the Nifty has been volatile but has managed to hold the 22,300 mark during the week, despite the election uncertainty as well as the uncertainty in the Middle East and West Asia.  

During the day, the Nifty at a level of 22,447, but that also provided to be the high point for the day. From that level, it dipped to a low of 22,349, before closing the day at 22,368 levels. In other words, the opening was at the high point of the day and the closing was at the closing was near to the low point of the day. What the Nifty gain of 32 points for the day does not tell us is that this daily performance came amidst a lot of weakness in the market with the undertone of the market being weak.

Subscription and price performance of Ramdevbaba Solvent IPO on listing day

Let us now turn to the subscription story of Ramdevbaba Solvent IPO. With robust subscription of 79.96X for the retail portion, 65.95X for the QIB portion, and 314.46X for the HNI / NII portion; the overall subscription was very strong at 126.21X. The IPO was a book building IPO issue with the IPO price band of between ₹80 to ₹85 per share. Being a book building issue, and backed by robust subscriptions, the IPO price got discovered at the upper end of the band. The stock listed at a strong premium of 31.76% 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 built issues and the listing price. The strong subscription had a positive impact on the ability of the stock  in 3 ways. Firstly, the strong subscription ensured that the IPO price got discovered at the upper end of the price band of ₹85 per share. Secondly, it led to the stock price listing at a very strong 31.76% premium to the issue price. Thirdly, despite pressure on the overall market and volatility, the stock closed 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 strong listing start

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

Data Source: NSE

The SME IPO of Ramdevbaba Solvent Ltd was a book built IPO and priced at the upper band of ₹85 per share. On 23rd April 2024, the stock of Ramdevbaba Solvent Ltd listed on the NSE at a price of ₹112 per share, a premium of 31.76% over the IPO issue price of ₹85. However, despite a volatile day post listing on 23rd April 2024, the stock of Ramdevbaba Solvent Ltd closed exactly at the upper circuit price of ₹117.60 per share on the NSE SME segment. The stock had an upper circuit limit of ₹117.60 for the day and a lower circuit limit of ₹106.40 per share for the day. In the midst of the volatility in trading during the day, the stock hit the upper circuit but only dipped marginally below the listing price, before bouncing back. However, later in the day, it recovered sharply and closed at the upper circuit price of 5%.

Due to the volatility in the stock price, the stock on listing day went below the listing price of the day, but it was only marginally lower than the listing price and never got close to the lower circuit price of the day. The closing price reflects a strong day of trading, because it closed at the upper circuit despite even briefly dipping below the listing price of the day. Also, the upper circuit comes on top of an 31.76% premium listing of the stock, which is all the more appreciable, considering that the Nifty and the Sensex had showed a lot of volatility on the day of listing of Ramdevbaba Solvent Ltd. The Nifty had gained 32 points while Sensex was up 90 points on the day; amidst a lot of volatility. Overall, the closing price of the stock of Ramdevbaba Solvent Ltd was a full 38.35% above the issue price at the close of the first day of listing on the NSE SME segment. This can be called a commendable listing show, especially considering that the stock had shown signs of jitteriness in the morning due to which the stock even briefly dipped below the listing price of the day.

Listed in the ST segment for trade in T2T

Being an SME IPO on the NSE, the stock of Ramdevbaba Solvent 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 low price of the day was below the listing price but well above the lower circuit level of the day, while the high price of the day was the upper circuit price of the day. Eventually, the stock closed the day at the upper circuit price of the day.

During the day, the stock hit the upper circuit but only after it had briefly spent time below the listing price, from where it bounced back sharply. While the stock dipped below the listing price of ₹112 per share, it steered clear of the lower circuit and bounced sharply to get back to the upper circuit lock of the day. On the NSE, the stock of Ramdevbaba Solvent 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 Ramdevbaba Solvent Ltd on listing day

On Day-1 of listing i.e., on 23rd April 2024, Ramdevbaba Solvent Ltd touched a high of ₹117.60 per share on the NSE and a low of ₹111.00 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 well above the lower circuit of the day and tad below the listing price. Between these two extreme prices, the stock was relatively 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 despite the Nifty and Sensex closed in the positive after a long, hard, and volatile day. The stock of Ramdevbaba Solvent Ltd closed at 5% upper circuit on top of a premium listing on the NSE.

During the trading day, the stock opened weak and even below the listing price, but stayed clear of the lower circuit price of the day. However, it later recovered to bounce back to close at the upper circuit. In terms of the circuit filter limits, the stock of Ramdevbaba Solvent Ltd had an upper circuit filter limit of ₹117.60 and a lower circuit band limit of ₹106.40. The stock closed the day 38.35% above the IPO issue price of ₹85 per share and it also closed 5% above the listing price of the day at ₹112.00 per share. During the day, the stock of Ramdevbaba Solvent Ltd hit the upper circuit and stayed locked in the upper circuit for most part of the day. However, it had first dipped below the listing price but stayed well clear of the lower circuit price of the day. The stock closed strong at the upper circuit at the close of the day with unmet buy quantity of 2,52,800 shares 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.

Robust volumes for Ramdevbaba Solvent Ltd on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Ramdevbaba Solvent Ltd stock traded a total of 21.68 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹2,472 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 in the second half, although the sellers were visible in the first half of the trading session; although buyers dominated the second half of trading. That also led the stock to close with pending buy orders of 2,52,800 shares (unmet) at the end of the trading session, although the price was very volatile during the day. It must be noted here that Ramdevbaba Solvent 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, Ramdevbaba Solvent Ltd had a market capitalization of ₹260.19 crore with free-float market cap of ₹105.74 crore. It has a total of 221.25 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 21.68 lakh shares during the day is accounted by delivery trades only, barring some error trade exceptions in the market. The stock trades on the NSE SME segment under the trading code (RBS) and will be available in the demat account under ISIN code (INE0RJH01010).

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 cap overall to the IPO size. Ramdevbaba Solvent Ltd had a market cap of ₹260.19 crore and the issue size was ₹50.27 crore. Therefore, the Market cap contribution ratio of the IPO works out to 5.18 times; which is at par with 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.