Freshara Agro Exports IPO Debuts at ₹135, Surges 16.3% Above Issue Price

Freshara Agro Exports Limited, a company specializing in procuring, processing, and exporting preserved gherkins and pickled goods, made a positive debut on the Indian stock market on Thursday, 24th October 2024, with its shares listing at a significant premium to the issue price on the National Stock Exchange (NSE) SME platform.

Listing Details

• Listing Price: Freshara Agro Exports shares were listed at ₹135 per share on the NSE SME platform, marking a strong start to its journey as a publicly traded company.
• Comparison to Issue Price: The listing price represents a substantial premium over the IPO issue price. Freshara Agro Exports had set its IPO price band from ₹110 to ₹116 per share, with the final issue price being fixed at the upper end of ₹116.
• Percentage Change: The listing price of ₹135 on the NSE SME translates to a premium of 16.3% over the issue price of ₹116.

First-Day Trading Performance

• Opening vs. Latest Price: Following its positive opening, Freshara Agro Exports' share price experienced some volatility. By 10:41 AM, the stock was trading at ₹132.60, down 1.78% from its opening price but still 14.31% above the issue price.
• Market Capitalisation: As of 10:41 AM, the company's market capitalisation stood at ₹311.60 crore.
• Trading Volume: The traded volume was 24.28 lakh shares with a traded value of ₹32.66 crore, indicating significant investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: The market initially reacted positively to Freshara Agro Exports' listing, though the stock experienced some selling pressure during early trading.
• Subscription Rate: The IPO was heavily oversubscribed by 236.80 times, with NIIs leading at 510.61 times subscription, followed by retail investors at 180.80 times, and QIBs at 129.22 times.
• Trading Range: The stock hit a high of ₹140 and a low of ₹128.25 during early trading.

Growth Drivers and Challenges

Expected drivers of future performance:

• Strong relationships with contract farmers ensuring raw material availability
• Comprehensive product portfolio serving global markets
• Advanced in-house processing facilities
• Multiple quality certifications including FSSAI, FDA, and BRCGS

Potential challenges:

• High debt-to-equity ratio of 2.77 as of September 2024
• Recent surge in profit margins raising sustainability concerns
• Dependence on agricultural produce and export markets

Utilisation of IPO Proceeds

Freshara Agro Exports plans to use the funds for:

• Meeting capital expenditure requirements
• Funding working capital needs
• General corporate purposes
• Issue expenses

Financial Performance

The company has demonstrated strong growth:

• Revenue increased by 56% to ₹19,819.58 lakh in FY2024 from ₹12,700.22 lakh in FY2023
• Profit After Tax (PAT) rose by 140% to ₹2,182.41 lakh in FY2024 from ₹908.2 lakh in FY2023

As Freshara Agro Exports begins its journey as a listed entity, market participants will closely monitor its ability to manage its high debt levels and maintain its growth trajectory. The positive listing and overwhelming subscription rates suggest optimistic market sentiment towards the company's prospects in the specialized food processing and export sector. Investors will be watching for sustained financial performance and effective management of the company's leverage levels.