Sadhav Shipping IPO Lists 42.11% higher, hits upper circuit

Strong listing for Sadhav Shipping IPO, then upper circuit

Sadhav Shipping IPO had a real strong listing on 01st March 2024, listing at a premium of 42.11%. 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 01st March 2024. What also stood out about the stock was the robustly strong listing largely supported by a frenetic rally in the market indices. In the aftermath of the stellar GDP numbers reported by the Indian economy for the third quarter of FY24, the Nifty showed no signs of relenting as it closed 356 points on the Nifty and 1,245 points higher on the Sensex. In the last few days, the Nifty has been volatile but once the GDP data was out, both the indices closed at record highs. The Nifty closed the weed at record highs of 22,339 and the Sensex also closed at record levels of 73,745.

During the day, the markets were driven higher by a number of factors, chief them among being the GDP numbers reported late on 29th February 2024. Against the street expectations of GDP for Q3FY24 in the range of 6.6% to 7.2%, the actual GDP reading for Q3 came in sharply higher at 8.4%. Even the full year GDP estimate was upped from 7.3% to 7.6%, but most experts now concede that the actual full year GDP could also be closer to the 8% mark. That puts India on a new higher plane of growth altogether. To add to the narrative, the fiscal deficit as of the end of January also came in at just 63.6% of the full year target, boosting the Nifty and the Sensex further.

Subscription and price performance of Sadhav Shipping IPO on listing day

Let us now turn to the subscription story of Sadhav Shipping IPO. With robust subscription of 65.52X for the retail portion, and 184.58X for the HNI / NII portion; the overall subscription was very strong at 135.69X. The IPO was a fixed price IPO issue with the IPO price fixed at ₹95 per share. Being a fixed price issue, there was really no question of price discovery. The stock listed at a strong premium of 42.11% 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 and the stock never really went below the listing price on the day of listing. This was reflective of strength in the stock amidst the strong market sentiments. The subscription normally impacts the price discovery in book built issues and the listing price. The strong subscription normally has a positive impact on the ability of the stock  in 3 ways, but in this case, being a fixed price IPO, the impact was only felt in two ways. Firstly, it led to the stock price listing at a very strong premium to the issue price. Secondly, despite the pressure on the overall market, the stock managed to close 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 bumper listing start

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

Data Source: NSE

The SME IPO of Sadhav Shipping Ltd was a fixed price IPO and priced at ₹95 per share. On 01st March 202, the stock of Sadhav Shipping Ltd listed on the NSE at a price of ₹135 per share, a premium of 42.11% over the IPO issue price of ₹95. However, amidst a strong trading day in the markets post listing on 01st March 2024, the stock of Sadhav Shipping Ltd closed exactly at the upper circuit price of ₹141.75 per share on the NSE SME segment. The stock had an upper circuit limit of ₹141.75 for the day and a lower circuit limit of ₹128.25 per share for the day. In the midst of the volatility in trading during the day, the stock hit the upper circuit but never went below the listing price, leaving along going close to the lower circuit price of the day. The stock closed with a lot of strength, which is evident from the fact that the price never really went below the listing price of the day.

The stock spent all day above the listing price and in fact spent most of the day locked at the upper circuit price. The closing price reflects a strong day of trading, because it closed at the upper circuit despite a string opening in the morning. Also, the upper circuit comes on top of an 42.11% premium listing of the stock, which is all the more appreciable, although it must be admitted that the Nifty and the Sensex closed at record highs for the day on 01st March 2024, the day of listing. Overall, the closing price of the stock of Sadhav Shipping Ltd was a full 49.21% above the issue price at the close of the first day of the stock listing on the NSE SME segment. This can be called a commendable performance, especially considering that the fact that the subscription for the stock was not too high, compared to similar stocks in the group.

Listed in the ST segment for trade in T2T

Being an SME IPO on the NSE, the stock of Sadhav Shipping 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 exactly at the lower circuit price 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 and stayed locked in the upper circuit for most part of the day. However, it never really went below the listing price on the downside, showing a lot of inherent strength. On the NSE, the stock of Sadhav Shipping 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 Sadhav Shipping IPO on listing day

On Day-1 of listing i.e., on 01st March 2024, Sadhav Shipping IPO touched a high of ₹141.75 per share on the NSE and a low of ₹135 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 exactly at the listing price of the day. That means, through the day, the stock never really went below the listing price. In fact, the stock can be said to have enjoyed a strong listing and was ably supported by the stellar rally in the Nifty and the Sensex during the day. The stock of Sadhav Shipping Ltd closed at 5% upper circuit on top of a premium listing on the NSE.

During the trading day, the stock opened strong and stayed strong, never really going below the listing price of the day. In terms of the circuit filter limits, the stock of Sadhav Shipping Ltd had an upper circuit filter limit of ₹141.75 and a lower circuit band limit of ₹128.25. The stock closed the day 49.21% above the IPO issue price of ₹95 per share and it also closed 5% above the listing price of the day at ₹135 per share. During the day, the stock of Sadhav Shipping Ltd hit the upper circuit and stayed locked in the upper circuit for most part of the day. However, it never really dipped below the listing price of the day at ₹135 per share. The stock closed strong at the upper circuit at the close of the day with unmet buy quantity of 2,35,200 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 Sadhav Shipping IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Sadhav Shipping Ltd stock traded a total of 26.00 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹3,584.65 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 dominating in the first half of the trading session. That also led the stock to close with pending buy orders of 2,35,200 shares (unmet) at the end of the trading session, although the price was very volatile during the day. It must be noted here that Sadhav Shipping 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, Sadhav Shipping Ltd had a market capitalization of ₹203.45 crore with free-float market cap of ₹62.17 crore. It has a total of 143.53 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 26.00 lakh shares during the day is accounted by delivery trades only, barring some market trade exceptions in the market. The stock trades on the NSE SME segment under the trading code (SADHAV) and will be available in the demat account under ISIN code (INE0K5H01010).

IPO size to Market cap contribution ratio of Sadhav Shipping Ltd

One way to assess the significance of the IPO on the market cap of the segment is the ratio of market overall to the IPO size. Sadhav Shipping IPO had a market cap of ₹203.45 crore and the issue size was ₹38.18 crore. Therefore, the Market cap contribution ratio of the IPO works out to 5.33 times; which is above 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.