Davin Sons Retail Lists at 20% Discount, Shows Mixed Performance on BSE SME

Davin Sons Retail Limited, a readymade garment manufacturer and FMCG distributor operating since 2022, marked a subdued entry into the public markets on Thursday, 9th January 2025. The company, which designs and manufactures garments like jeans and denim jackets across eight Indian states, commenced trading on the BSE SME platform amid cautious investor sentiment despite strong subscription numbers.

Davin Sons Listing Details

The company's market debut reflected measured investor response to its business model and growth prospects:

• Listing Time & Price: When trading commenced at market open, Davin Sons Retail shares debuted at ₹44 on BSE SME, representing a 20% discount to IPO investors. This muted opening suggests investors took a cautious view of the company's relatively short operating history and high growth rates that need to be sustained.
• Issue Price Context: The disappointing debut came after the company had fixed its IPO price at ₹55 per share in a fixed price issue. The pricing may have been perceived as ambitious by the market given the company's recent conversion from proprietorship to public limited entity in 2022.
• Price Evolution: By 10:52 AM IST, some buying interest emerged as the stock hit the upper circuit at ₹46.20, though still trading at a 16% discount to the issue price, demonstrating continued investor caution despite some recovery from the opening levels.
   

Davin Sons First-Day Trading Performance 

The trading activity showed moderate participation with balanced investor interest:

• Volume and Value: Within just the first few hours, 1.80 lakh shares changed hands, generating a turnover of ₹79.74 lakh. Notably, 100% of traded shares were marked for delivery, indicating genuine investment interest despite the discounted pricing.
• Demand Dynamics: The stock's trading pattern showed some recovery with buy orders for 1.92 lakh shares while sellers remained absent at the upper circuit, reflecting possible value buying after the weak opening.
   

Davin Sons Market Sentiment and Analysis

• Market Reaction: Weak opening followed by some recovery
• Subscription Rate: The Davin Sons IPO had been significantly oversubscribed by 120.8 times, with retail investors leading at 164.78 times subscription, followed by NIIs at 66.1 times
• Pre-listing Expectations: The significant subscription levels did not translate into listing gains

Davin Sons Growth Drivers and Challenges

Expected drivers of future performance:

• Diversified product portfolio
• Quality and innovation focus
• Experienced management team
• Strong customer relationships
• Multi-state presence
•  

Potential challenges:

• Limited operating history
• High growth sustainability needs
• Small scale of operations
• Competitive garment sector
   

Utilisation of IPO Proceeds 

The ₹8.78 crore raised will be used for:

• Warehouse purchase
• Working capital requirements
• General corporate purposes

Davin Sons Financial Performance 

The company has shown strong growth from a small base:

• Revenue increased by 242% to ₹13.39 crore in FY2024 from ₹3.91 crore in FY2023
• H1 FY2025 (ended September 2024) showed revenue of ₹6.34 crore with PAT of ₹0.74 crore
• Strong financial metrics with ROE of 49.41% and ROCE of 54.52%

As Davin Sons Retail begins its journey as a listed entity, market participants will closely monitor its ability to sustain its high growth rates and establish itself more firmly in the market. The discounted listing and subsequent upper circuit suggest investors are taking a wait-and-watch approach to the company's prospects in the competitive garment manufacturing sector, particularly given its recent corporate conversion and need to prove sustainable growth.