Chavda Infra IPO Listing Day Details

Strong listing for Chavda Infra IPO, but fails to hold on

Chavda Infra Ltd had a strong listing on 25th September 2023, listing at a sharp premium of 40%, but subsequently losing ground and closing at the -5% lower circuit on the listing price. Of course, the stock still closed comfortably above the IPO issue price. In a sense, the markets came under pressure as the Nifty also gyrated during the day and eventually closed flat for the day. The weakness in the market was largely on account of the sharp fall in the Nifty and Sensex in recent days with the Nifty falling below the 20,000 and the 19,800 support levels. That is why, although the listing of the stock was at a smart premium of 40% over the IPO issue price, it could not sustain the gains for the day and closed at the lower circuit for the day.

The stock of Chavda Infra Ltd did show a lot of strength on opening and tried to hold higher. However, the pressure of the market overall was just too much to handle. The stock closed above the IPO prices issue price but it tapered below the listing price to close at 5% lower circuit on the listing price of the stock. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Chavda Infra Ltd opened 40% higher and the opening price turned out to be very close to the high price for the day. With subscription of 202.07X for the retail portion, 241.96X for the HNI / NII portion and 95.10X for the QIB portion; the overall subscription was extremely healthy at 180.06X. The subscription numbers were so strong that it allowed the discovery of the price of the IPO at the upper end of the band at ₹65 per share. In addition, it also allowed the stock to list at a huge premium of 40%, even on a day when the market sentiments were very weak. However, it could not sustain the gains for the day as the selling pressure on the market was quite strong.

Stock closes Day-1 at substantial premium, but fails to hold on

Here is the pre-open price discovery for the Chavda Infra IPO on the NSE.

Data Source: NSE

Chavda Infra IPO was priced in the price band of ₹60 to ₹65 via the book building format and the price discovery happened at the upper end of the band due to the strong subscription numbers. On 25th September 2023, the stock of Chavda Infra Ltd listed on the NSE at a price of ₹91, a premium of 40% on the IPO issue price of ₹65. Not surprisingly, the price was discovered at the upper end of the band for the IPO. However, the stock faced pressure and could only traverse briefly above the listing price as it closed the day at a price of ₹86.45, which is 33% above the IPO issue price but -5% below the listing price of the stock on the first day of listing. In a nutshell, the stock of Chavda Infra Ltd had closed the day exactly at the lower circuit price for the stock of -5% with only sellers and no buyers. 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 very close to the high price of the day, while the closing price was the low price of the day.

How prices traversed for Chavda Infra IPO on listing day

On Day-1 of listing i.e., on 25th September 2023, Chavda Infra Ltd touched a high of ₹92 on the NSE and a low of ₹86.45 per share. The high price of the day was marginally above the opening price of the stock while the stock closed at the low point of the day, which also represents the lower circuit of 5%. Incidentally, the closing price represented the 5% lower circuit price of the stock for the day, which is the maximum that the SME IPO stock is allowed to move in the day. The sell-off in the stock is not surprising considering the volatility in the market and the tepid close of the Nifty at a flat level. The stock closed at the 5% lower circuit with 18,000 sell quantity and no buyers. For the SME IPOs, 5% is the upper limit and also the lower circuit on the listing price on the day of listing.

Robust volumes for Chavda Infra IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Chavda Infra Ltd stock traded a total of 19.38 lakh shares on NSE SME segment amounting to value of ₹1,734.90 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. That also led the stock to close at the lower end of the circuit filter. It must be noted here that Chavda Infra 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, Chavda Infra Ltd had a market capitalization of ₹213.15 crore with free-float market cap of ₹57.55 crore. It has a total of 246.56 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 19.38 lakh shares during the day is accounted for only by delivery trades.

Brief on the business model of Chavda Infra Ltd

Chavda Infra Ltd was incorporated in 2012 to provide construction and allied services. It provides these services across the gamut of residential, commercial, and institutional projects in the state of Gujarat. The group is broadly active in the cities of Ahmedabad, Gandhinagar, and Rajkot. It has developed and delivered more than 100 projects in Gujarat spread across residential, commercial, and institutional properties. It offers planning, design, construction, and post-construction activities.

Some of the popular and reputed projects completed by Chavda Infra in Ahmedabad include Straft Luxuria, Shivalik Parkview, Shivalik Sharda Harmony among key residential projects. Among commercial properties developed, they include AAA Corporate House, Sadbhav House, Solitaire Sky, Sandesh Press, Suyash Solitaire and Solitaire Connect. Some of its premium projects include the Nirma University (old building), Zydus School and AIS Toddlers Den. It currently has about 26 ongoing projects at various stages of completion with a combined value of over ₹600 crore.

The company has been promoted by Mahesh Chavda, Dharmishta Chavda and Johil Chavda. The promoter holding (including the promoter group) in the company currently stands at 100%. However, post the fresh issue of shares and the IPO, the promoter equity holding share will reduce to 73%. The fresh issue funds will be used by the company for filling its working capital funding gaps and also for general corporate purposes. Part of the funds raised will also go towards meeting issue expenses. While Beeline Capital Advisors Private Ltd will be the lead manager to the issue, KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is Spread X Securities Ltd.