Essen Speciality Films Ltd SME-IPO lists at 30.84% premium, gains further

Essen Speciality Films Ltd had a strong listing on 06th July 2023, listing at a sharp premium of 30.84%, but subsequently bounced and closed much above the listing price at the close of trading. In a sense, the Nifty surged by 99 points on 06th July 2023 and closed absolutely at the threshold of the 19,500 mark. This factor also helped to buoy the sentiments in the market. This helped the stock of Essen Speciality Films Ltd IPO to hold on and close with smart gains on the listing day. Several positive factors weighed on the markets on 06th July 2023. For instance, the stock of Essen Speciality Films Ltd was buoyed by macro factors like the positive CAD, the promise of flat to lower rates in Indi and global growth picking up faster than expected. Above all, the business model and positioning also appealed to the investors.

The stock of Essen Speciality Films Ltd did show a lot of strength during the day, and closed above the listing price as well as the issue price on the first day of trading on the NSE. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Essen Speciality Films Ltd opened 30.84% higher and the opening price turned out to be the low price for the day. With subscription of 68.07X for the retail portion, 112.21X for the HNI / NII portion and 45.26X for the QIB portion; the overall subscription was also quite healthy at 71.03X. The subscription numbers were so strong that it allowed the stock to list at a huge premium and then sustain the premium post listing.

The SME IPO of Essen Speciality Films Ltd was priced in the IPO price band of ₹101 to ₹107 with the IPO price being eventually discovered at ₹107. The issue was a book building issue. On 06th July 2023, the stock of Essen Speciality Films Ltd listed on the NSE at a price of ₹140, a premium of 30.84% on the IPO issue price of ₹107. However, the stock bounced sharply from lower levels and it closed the day at a price of ₹147, which is 37.38% above the IPO price and 5% above the listing price of the stock on the first day of listing. In a nutshell, the stock of Essen Speciality Films Ltd  had closed the day exactly at the upper circuit price for the stock of 5% with only buyers and no sellers. The upper circuit price on listing day is calculated on the listing price and not on the IPO price for the SME listed stocks on NSE. The opening price actually turned out to be the low price of the day.

On Day-1 of listing i.e., on 06th July 2023, Essen Speciality Films Ltd touched a high of ₹147 on the NSE and a low of ₹140 per share. The opening price turned out to be the low point while the stock closed at the high point of the day. Incidentally, the closing price also represented the 5% upper 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 facing some psychological resistance at the 19,500 levels. The stock closed at the 5% upper circuit with 1,76,400 buy quantity and no sellers. For the SME IPOs, 5% is the upper limit over the listing price on the day of listing. Here is the gist of the price discovery for Essen Speciality Films in the pre-open session of the day.

Data Source: NSE

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Essen Speciality Films Ltd stock traded a total of 22.03 lakh shares on NSE SME segment amounting to value of ₹3,149.47 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 at any point of time. That also helped the stock to close at the upper end of the circuit filter. It must be noted here that Essen Speciality Films 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, Essen Speciality Films Ltd had a market capitalization of ₹304.28 crore with free-float market cap of ₹91.28 crore. It has a total of 206.99 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 22.03 lakh shares during the day is accounted for only by delivery trades.

Here is a quick background about the company in question. Essen Speciality Films Ltd was incorporated in 2002. The company manufactures and exports specialized plastic products predominantly in the home furnishing and the home improvement segments. Its main customers for its products include some of the key multinational retail chains like IKEA, Wal-Mart, Kmart, Kohl, Kroger, and Bed, Bath & Beyond. Essen offers bath area accessories, artificial plants and flowers, storage, and organization units. It has a diverse customer base across a gamut of industry groups and its demand is a mix of retail and institutional. They comprise of departmental stores, discount stores, retailers, hypermarkets, home improvement stores etc. 

Essen Speciality Films also supplies directly to select global importers and exporters, where such volumes are justified. It services clients in more than 24 geographies including China, UK, Saudi Arabia, US, Qatar, Germany, Italy, Canada, New Zealand, Spain, Belgium, Austria, Mexico and many more. The fresh funds will be used for prepayment of loans to reduce the debt levels as well as for funding the working capital needs of the company. The issue is being lead managed by GYR Capital Advisors Ltd while Bigshare Services Private Limited is the registrar to the issue.