Supreme Facility IPO Lists at 1.3% Discount, Shows Mixed Trading on NSE SME

Supreme Facility Management Limited, an integrated facility management services provider operating since 2005, marked its entry into the public markets on Wednesday, 18th December 2024. The company, which has established itself with over 10,900 employees providing services across housekeeping, staffing, and corporate food solutions, commenced trading on the NSE SME platform with subdued investor response.

Listing Details of Supreme Facility IPO

The company's market debut reflected cautious investor sentiment despite its established business model:

• Listing Time & Price: When trading commenced at market open, Supreme Facility Management shares debuted at ₹75 on NSE SME, representing a 1.32% discount to the IPO investors. This tepid opening came as a surprise given the pre-listing grey market premium of ₹24, which had indicated potential for a 32% premium.
• Issue Price Context: The initial pricing was set between ₹72 and ₹76 per share, with the final issue price fixed at ₹76. Despite the moderate pricing approach, the market's initial response suggested a more conservative valuation outlook.
• Price Evolution: By 10:50 AM IST, the stock declined further to ₹71.25, hitting the lower circuit at 5% below the listing price, indicating continued selling pressure in early trading.

Supreme Facility IPO First-Day Trading Performance 

The trading activity showed significant participation despite the price weakness:

• Volume and Value: Within the first few hours, 13.89 lakh shares changed hands, generating a turnover of ₹10.23 crore. Notably, 100% of traded shares were marked for delivery, suggesting genuine investor participation rather than speculative trading.
• Demand Dynamics: The stock's trading pattern showed considerable selling pressure with orders for 7.32 lakh shares on the sell side, while buyers remained absent at the lower circuit, reflecting cautious investor sentiment.

Market Response and Subscription Analysis of Supreme Facility

• Market Reaction: Heavy selling pressure leading to lower circuit
• Subscription Rate: The Supreme Facility IPO had been oversubscribed by 27.01 times, with retail investors leading at 42.5 times subscription, followed by NIIs at 15.7 times, and QIBs at 8.24 times
• Pre-listing Expectations: Grey market premium had indicated a potential 32% listing gain, which failed to materialize

Supreme Facility Growth Drivers and Challenges 

Expected drivers of future performance:

• Diverse service portfolio
• Strong client relationships across sectors
• Wide presence with large workforce
• Technology-driven operations
• Experienced management team

Potential challenges:

• High debt-to-equity ratio of 2.49
• Competitive service industry
• Dependence on human resources
• Working capital intensive business

Utilisation of IPO Proceeds 

The ₹50 crore raised will be used for:

• Working capital requirements
• Pursuing inorganic initiatives
• General corporate purposes

Supreme Facility Financial Performance 

The company has shown steady growth:

• Revenue increased by 7.91% to ₹35,695.39 lakhs in FY2024 from ₹33,078.49 lakhs in FY2023
• Q1 FY2025 (ended June 2024) showed revenue of ₹9,932.76 lakhs with PAT of ₹240.83 lakhs
• Solid financial metrics with RoNW of 21.29% and ROCE of 23.10%

As Supreme Facility Management begins its journey as a listed entity, market participants will closely monitor its ability to manage growth while addressing its high leverage. The discounted listing and subsequent lower circuit suggest investors are taking a cautious view of the company's prospects in the competitive facility management sector.