Sahaj Fashions IPO lists at 3.33% premium, closes flat

Tepid listing for Sahaj Fashions IPO; just about holds on

Sahaj Fashions Ltd had a tepid listing on 06th September 2023, listing at a very tepid premium of 3.33%, but subsequently closing almost flat for the day. Of course, the stock still managed to close above the IPO issue price of ₹30 per share, but only just. In a sense, the markets witnessed pressure in the second half of trading on 06th September 2023, since the markets could not sustain gains at higher levels with rising crude prices being an overhang on the markets. The sentiments in the market did not help much but even otherwise, the stock did have a very tepid listing and managed to close the day just about the listing price. While there were bouts of buying in the stock during the day, for most part of the day, the pressure of selling was higher than the buying support on the counter.

The stock of Sahaj Fashions Ltd did show an iota of robustness after listing on the opening and tried to hold higher. However, the pressure of the market overall and the tepid subscription performance of the IPO combined to put the stock under stress. The stock opened above the issue price and also managed to close above the IPO price, but the pressure was quite apparent. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Sahaj Fashions Ltd opened 3.33% but failed to hold on to these levels. During the day, the stock rallied above the listing price and also briefly fell below the opening price and the issue price of the day.

However, the close for the day was still marginally above the IPO issue price. With subscription of 11.72X for the retail portion and 3.78X for the HNI / NII portion; the overall subscription was moderate, at best, at 7.75X. The subscription numbers were relatively tepid compared to the normally benchmark subscriptions that SME IPOs get. These subscription numbers allowed the stock to list at a moderate premium on a day when the market sentiments were not too strong. However, it could not sustain the gains for the day as the selling pressure on the market mounted. However, despite tepid subscription levels, the stock did manage to close marginally above the issue price, albeit just below the listing price of the day..

Sahaj Fashions closes Day-1 at marginal premium

Here is the pre-open price discovery for the Sahaj Fashions IPO on the NSE.

Data Source: NSE

Sahaj Fashions IPO was a fixed price IPO and the IPO price was set at ₹31 per share via the fixed price methodology. On 06th September 2023, the stock of Sahaj Fashions Ltd listed on the NSE at a price of ₹31, a premium of 3.33% on the IPO issue price of ₹30. Not surprisingly, the price was discovered at the upper end of the band for the IPO, which is routine where the subscription is above 7X levels.

However, the stock faced pressure and could only traverse briefly above the listing price as it closed the day at a price of ₹30.75, which is 2.50% above the IPO issue price but -0.81% below the listing price of the stock on the first day of listing. The listing cannot be classified as disappointing, although it can be said to be largely tepid. In a nutshell, the stock of Sahaj Fashions Ltd had closed the day above the IPO issue price, although it did close below the IPO listing price. 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 approximately between the high of the day and the low of the day.

How prices traversed for Sahaj Fashions IPO on listing day

On Day-1 of listing i.e., on 06th September 2023, Sahaj Fashions Ltd touched a high of ₹32.00 on the NSE and a low of ₹29.45 per share. The high price of the day was above the opening price of the stock while the low price of the day represented the 5% circuit below the listing price. However, the stock did manage to hit the lower circuit price during the day and bounce back, which is a strong underlying signal for the stock structure.

All SME stocks, by default, are introduced to trading in the SME segment on trade-to-trade basis. That means, these stocks will mandatorily be on pure delivery basis (intraday not permitted), while the stock would be subjected to 5% circuit limits on the upside and on the downside. What is truly appreciable is that the stock closed relatively positive despite the overall Nifty facing resistance and also despite the very tepid subscription numbers for the IPO of Sahaj Fashions Ltd. The stock touched the 5% lower circuit during the day but did present a sharp bounce from lower levels. It actually closed the day with 4,000 buy quantity pending and no sellers on the counter. For the SME IPOs, 5% is the upper limit and also the lower circuit on the listing price on the day of listing.

Moderate volumes for Sahaj Fashions IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Sahaj Fashions Ltd stock traded a total of 23.44 lakh shares on NSE SME segment amounting to value of ₹720.08 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, the undertone had changed toward buying with the closing of the day showing pending buy orders on the Sahaj Fashions counter. That also led the stock to close at the lower end of the circuit filter. It must be noted here that Sahaj Fashions 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, Sahaj Fashions Ltd had a market capitalization of ₹40.49 crore with free-float market cap of ₹14.31 crore. It has a total of 131.68 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 23.44 lakh shares during the day, barring some trading related anomalous exceptions, is accounted for only by delivery trades.

Read about Sahaj Fashions IPO

Brief on the business model of Sahaj Fashions Ltd

Sahaj Fashions Ltd  was incorporated in 2011 to manufacture fabric for garment making, home furnishings, apart from a variety of industrial applications. Apart from manufacturing cotton suiting and shirting fabric, Sahaj Fashions Ltd also makes polyester-based and cotton-polyester blended fabrics. Its product that is top on the demand charts from the garments manufacturers is the cotton yarn-dyed fabrics. Its product catalogue comprises of Piece dyed shirting, cotton yarn dyed shirting, Chambray, Self-designed shirting, Lycra and linen fabrics, cotton duck fabric, drill, and twill fabric. It has its manufacturing unit located on the Kishangarh Bhilwara Express Highway, near Ajmer in Rajasthan.

The company has built a complete ecosystem for top class performance and delivery to customers. It has high speed air jet looms, compressors for supply of best quality air,  and a humidification plant to suit cotton fabrics manufacturing at high speed. For the weaving preparatory jobs, Sahaj Fashions Ltd has installed sectoral warping machines, apart from two direct warping machines for cone unwinding and warping. Sizing of all types of yarn is done through PLC based sizing machines with uninterrupted power supply to the unit.

The company has been promoted by Rohit Toshniwal, Sadhana Toshniwal, and others. The promoter holding in the company currently stands at 97.95%. However, post the fresh issue of shares and the OFS, the promoter equity holding share will reduce to 64.66%. The fresh issue funds will be used by the company for meeting its working capital funding gaps and for prepayment of certain secured borrowings. Part of the funds raised will also go towards general corporate expenses. While Khambatta Securities Ltd will be the lead manager to the issue, Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is NNM Securities Ltd.