BikeWo GreenTech IPO Lists at ₹45 on NSE SME, Drops 27.4% Below Issue Price

BikeWo GreenTech Limited, an electric two-wheeler retailer in India, made a disappointing debut on the Indian stock market on Friday, 27th September 2024, with its shares listing at a significant discount to the issue price. Despite strong investor demand during the subscription period, the company's initial public offering (IPO) failed to maintain momentum on its first day of trading.

Listing Details

• Listing Price: BikeWo GreenTech shares were listed at ₹45 per share on the NSE SME platform, marking a weak start to its journey as a publicly traded company.
  Comparison to Issue Price: The listing price represents a substantial discount to the IPO issue price. BikeWo GreenTech had set its IPO price band from ₹59 to ₹62 per share, with the final issue price being fixed at the upper end of ₹62.
  Percentage Change: The listing price of ₹45 on the NSE SME translates to a discount of 27.4% below the issue price of ₹62.

First-Day Trading Performance

• Opening vs. Latest Price: Following its weak opening, BikeWo GreenTech's share price recovered some ground. By 10:20 AM, the stock was trading at ₹47.25, up 5% from its opening price but still 23.79% below the issue price.
• Market Capitalisation: As of 10:20 AM, the company's market capitalisation stood at ₹61.63 crore.
• Trading Volume: The traded volume was 2.88 lakh shares with a traded value of ₹1.33 crore, indicating moderate investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: The market reacted negatively to BikeWo GreenTech's listing. The significant discount to the issue price indicates weak demand and investor caution regarding the company's prospects.
• Subscription Rate: Despite the weak listing, the IPO was oversubscribed by 41.82 times, with retail investors leading at 61.04 times subscription, QIBs at 43.03 times, and NIIs at 22.48 times.
• Price Band: After initial weakness, the stock hit its upper circuit of ₹47.25 (5% above the opening price) during morning trading.

Growth Drivers and Challenges

Expected drivers of future performance:

• Premium EV retail business with dealerships for popular brands
• Unique business model with presence in various states across India
• Expansion in the after-sales segment driving revenue growth
• Plans to open new dealership stores in multiple states

Potential challenges:

• Highly competitive electric vehicle retail sector
• Dependence on third-party/franchise business model
• Inconsistent bottom-line performance in recent years

Utilisation of IPO Proceeds

BikeWo GreenTech plans to use the funds for:

• Purchasing electric two-wheeler vehicles for selling and supplying to dealers
• Setting up eleven new dealership stores in various states
• Repayment of certain outstanding borrowings
• General corporate purposes

Financial Performance

The company has demonstrated mixed financial results:

• Revenue increased by 22% to ₹2,514.21 lakh in FY2024 from ₹2,061.86 lakh in FY2023
• Profit After Tax (PAT) rose significantly by 1606% to ₹167.21 lakh in FY2024 from ₹9.8 lakh in FY2023

As BikeWo GreenTech begins its journey as a listed entity, market participants will closely monitor its ability to leverage its position in the growing electric two-wheeler market and execute its expansion plans to drive future growth and improve shareholder value. The weak listing, despite strong subscription rates, suggests cautious market sentiment towards the company's prospects in the competitive EV retail sector.