Baba Food Processing India IPO lists flat, closes at -5% lower circuit

Flat listing for Baba Food Processing India IPO, then lower circuit

Baba Food Processing India IPO had an absolutely flat listing on 15th November 2023, listing exactly at the issue price. However, after a flat opening, the stock struggled under the selling pressure and closed the day at the -5% lower circuit on the listing price. For the day, the stock closed well below the IPO issue price and also the IOP listing price. Despite a flat listing and strong markets overall, the stock of Baba Food Processing India Ltd, closed on 15th November 2023 at the -5% lower circuit. It must be noted here that the Nifty and Sensex were very strong on Wednesday and despite that the stock listed flat and closed at the lower circuit for the day.

On 15th November 2023, the Nifty closed 232 points higher while the Sensex closed 742 points higher in response to the lower than expected inflation in the US, which triggered a massive rally in the Dow and the NASDAQ overnight. In the last few days, the Nifty has been volatile but has managed to hold the 19,400 mark, and today it closed at 19,675 levels. The rather tepid performance of the stock is quite surprising on listing day because not only were the overall sentiments in the market strong, but even the subscription levels of the company were quite strong in the IPO.

Subscription levels, and how it impacted listing of Baba Food Processing India IPO

Let us now turn to the subscription story of Baba Food Processing India IPO. With impressive subscription of 60.82X for the retail portion, 147.02X for the QIB portion, and 84.73X for the HNI / NII portion; the overall subscription was extremely healthy at 69.44X. The IPO was a book built IPO issue with the IPO price brand in the range of ₹72 to ₹76 per share. Thanks to the robust response to the IPO, the stock price for the IPO got discovered at the upper band of ₹76 per share. The stock listed absolutely flat on the NSE. However, subsequently, despite the stock opening flat in a strong market and supported by robust subscription numbers, the stock went on to close at the lower circuit of -5% on the listing price.

This was reflective of pressure on the stock at higher levels, on a day when overall market sentiments were very strong. The subscription normally impacts the price discovery in book building issues and the listing price. The strong subscription has a positive impact on the ability of the stock  in two ways. Firstly, it led to the stock price getting discovered at the upper end of the band at ₹76 per share and that was seen in this case. However, on the day of listing, the stock managed to open just about flat at the IPO price, but it went on to close the day at the -5% lower circuit on the listing price at the close of the day.

Stock closes Day-1 at lower circuit, after a flat opening

Here is the pre-open price discovery for the Baba Food Processing India IPO on the NSE.

Data Source: NSE

The SME IPO of Baba Food Processing India Ltd was priced at ₹76 per share, being the upper end of the book building price band. On 15th November 2023, the stock of Baba Food Processing India Ltd listed on the NSE flat at a price of ₹76.00 per share, which is exactly at the IPO issue price of ₹76 per share. However, despite a volatile day post listing on 15th November 2023, the stock of Baba Food Processing India Ltd closed exactly at the lower circuit price of ₹72.20 per share. The stock had an upper circuit limit of ₹79.80 for the day and a lower circuit limit of ₹72.20 for the day. In the midst of the volatility in trading during the day, the stock never got above the listing price on the day, leave along getting close to the upper circuit. However, the stock eventually closed the day exactly at the lower circuit price. The closing price reflects a mixed day of trading, because it closed at the lower circuit after a flat opening for the day. However, this lower circuit comes after a flat opening on a day when the Nifty and the Sensex recorded very strong gains.

Being an SME IPO on the NSE, the stock of Baba Food Processing India 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 opening price of the day was at a huge premium to the issue price. During the day, the stock made attempts to hit the upper circuit but stayed well below the upper circuit but the close was exactly at the lower circuit price. On the NSE, the stock of Baba Food Processing India 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 Baba Food Processing India IPO on listing day?

On Day-1 of listing i.e., on 15th November 2023, Baba Food Processing India Ltd touched a high of ₹76.00 per share on the NSE and a low of ₹72.20 per share. The high price of the day was the opening price of the day and was well below the upper circuit filter limit price of ₹79.80 per share. However,  the stock closed at the lower circuit price of ₹72.20 per share. Between these two extreme prices, the stock was relatively volatile and eventually closed at the lower circuit price of the day. In fact, the stock can be said to have enjoyed a flat listing and weak close, despite very strong performance by the Nifty and Sensex.

For the best part of the day, the stock stayed well below the IPO issue price and also the IPO listing price, which were one and the same for the day. It closed the day exactly at the 5% lower circuit for the day. In terms of the circuit filter limits, the stock of Baba Food Processing India Ltd had an upper circuit filter limit of ₹79.80 and a lower circuit band limit of ₹72.20. The stock closed the day -5.00% below the IPO issue price of ₹76 per share and also closed -5% below the listing price of the day also at ₹76 per share. During the day, the stock of Baba Food Processing India Ltd never crossed the IPO listing price, leave alone get close to the upper circuit for the day. However, the stock touched the lower circuit price of the day before actually closing locked at lower circuit at close for the day. The stock closed under pressure at the lower circuit at the close of the day with 8,000 sell quantity and no buyers 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 on the day of listing.

Moderate to robust volumes for Baba Food Processing India IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Baba Food Processing India Ltd stock traded a total of 9.70 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹723.71 lakhs on the first day. The order book during the day showed a lot of volatility with the sell orders consistently exceeding the buy orders at any point of time post the flat listing. That also led the stock to close at the lower circuit of the day with pending sell orders at the end of the trading session, although the price was volatile during the day. It must be noted here that Baba Food Processing India 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, Baba Food Processing India Ltd had a market capitalization of ₹117.88 crore with free-float market cap of ₹31.33 crore. It has a total of 163.26 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 9.70 lakh shares during the day is accounted by delivery trades only, barring some market trade exceptions in the market.