De Neers Tools IPO lists at stellar 88.12% premium

De Neers Tools Ltd had a strong listing on 11th May 2023, listing at a sharp premium of 88%, but subsequently closed a little lower by about Rs10 from the listing price. In a sense, the markets came under pressure as the Nifty slipped and closed with marginal losses after a very strong rally in the market. However, the stock still closed at a very hefty premium to the IPO price. For now, the headwinds like the inversion of the yield curve, the negative news flows on banks and the SVB Financial crisis are the major talking points and continue to keep the markets under pressure at higher levels and that is a challenge. To add to that, the sharp rally in the Nifty also weighed on the markets on 11th May 2023. However, the stock of De Neers Tools Ltd managed to hold on for the day quite strong, despite falling below the listing price.

The stock of De Neers Tools Ltd did show a lot of strength during the day. While the stock closed below the listing price it st9ill closed at a substantial premium to the IPO price of Rs101. Being an NSE SME IPO, it is only traded on the SME segment of NSE. De Neers Tools Ltd opened 88.12% higher although the opening price turned out to be the high price for the day. With subscription of 11.88X for the retail portion, 60.16X for the HNI / NII portion and 3.72X for the QIB portion; the overall subscription was quite healthy at 15.04X. The subscription numbers were strong and allowed the stock to list at a premium although the size of the listing premium was much beyond expectations and well above what the GMP was indicating ahead of the IPO listing.

The SME IPO of De Neers Tools Ltd was priced at in the price band of Rs95 to Rs101 and the price had been discovered at Rs101, which is not surprising considering the subscription interest across segments. On 11th May 2023, the stock of De Neers Tools Ltd listed on the NSE at a price of Rs190, a premium of 88.12% on the IPO issue price of Rs101. However, that turned out to be the high price of the day and the stock tapered from higher levels and it closed the day at a price of Rs180.50. That is 68.81% above the IPO price and -5% below the listing price of the stock on the first day of listing. In a nutshell, the stock of De Neers Tools Ltd closed the day exactly at the lower circuit price for the stock of -5% with only sellers and no buyers. The lower circuit price on listing day is calculated on the listing price and not on the IPO price. It was still a closure at a substantial premium to the issue price.

On Day-1 of listing i.e., on 11th May 2023, De Neers Tools Ltd touched a high of Rs190 on the NSE and a low of Rs180.50 per share. The opening price turned out to be the high point while the stock closed at the low point of the day. Incidentally, the closing price also 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. What is truly appreciable is that the stock closed strong despite the overall Nifty falling by about 19 points on 11th May 2023 and coming under pressure at higher levels. The stock closed at the 5% lower circuit with 3,600 sell quantity and no buyers. For the SME IPOs, 5% is the upper limit and the lower limit on the listing price on the day of listing.

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the De Neers Tools Ltd stock traded a total of 8,17,200 shares on NSE SME segment amounting to value of Rs1,539.77 lakhs on the first day. The order book during the day showed a lot of buying with the buy orders consistently exceeding the sell orders but veered towards selling towards the end of trading, which led to the lower circuit intraday. Asa result, the stock closed at the lower end of the intraday circuit filter. It must be noted here that De Neers Tools 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, De Neers Tools Ltd had a market capitalization of Rs155.35 crore. It has a total of 86.06 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 8.17 lakh shares during the day is accounted for only by delivery trades.

De Neers Tools Ltd was incorporated in 1952 to manufacture and supply industrial tools. These include a range of instruments like spanners, wrenches, pliers, cutters, Allen keys, hammers etc. It has a network of 250 dealers across India and sells under the brand name of “De Neers”. It also makes non-sparking tools, stainless steel tools, magnetic tools, titanium tools etc. Its client roster includes Tata Steel, IOCL, L&T, Polycab, Indian Railways etc.

The issue was lead managed by Khambatta Securities Ltd and Share India Services Ltd while the registrars to the IPO were Bigshare Services Private Ltd. The Rs.22.99 crore IPO of De Neers Tools Ltd comprises entirely of a fresh issue of the said amount. The price band was fixed in the range of Rs95 to Rs101 and the eventual price discovery happened at Rs101, which is the upper end of the band. The fresh issue portion of 22.764 lakh shares at the discovered IPO price of Rs101 was worth Rs22.99 crore.