Jiwanram Sheoduttrai Industries IPO lists at 30.43% premium, tapers later

Strong listing for Jiwanram Sheoduttrai Industries Ltd, but fails to hold on

Jiwanram Sheoduttrai Industries Ltd had a strong listing on 18th September 2023, listing at a sharp premium of 30.43%, but subsequently losing ground and closing at the 5% lower circuit over 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 fell by 59 points on the day and the Sensex fell by 242 points for the day on 18th September 2023. This had a spill-off effect on the stock listing performance also. Traders were also going light into a trading holiday on Tuesday. More so after the Nifty had closed the previous week at an all-time high level of 20,192. However, despite such a weak day of trading, the listing of the stock was at a smart premium of 30.43% although it could not sustain the gains for the day and closed at the lower circuit for the day. SME stocks are on T2T on listing and subjected to 5% circuit either ways over the listing price.

The stock of Jiwanram Sheoduttrai Industries 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 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. Jiwanram Sheoduttrai Industries Ltd opened 30.43% higher and the opening price turned out to be the high price for the day. With subscription of 151.47X for the retail portion, and 69.75X for the HNI / NII portion; the overall subscription was extremely healthy at 112.96X. The subscription numbers were so strong that it allowed the stock to list at a huge premium 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 and ended up tapering to the lower circuit.

Stock closes Day-1 above IPO price, but below listing price

Here is the pre-open price discovery for the SME IPO of Jiwanram Sheoduttrai Industries IPO on the NSE.

Data Source: NSE

The SME IPO of Jiwanram Sheoduttrai Industries Ltd was a fixed price IPO and the price was already fixed at ₹23 per share via fixed pricing format. On 18th September 2023, the stock of Jiwanram Sheoduttrai Industries Ltd listed on the NSE at a price of ₹30, a premium of 30.43% on the IPO issue price of ₹23. The premium listing was largely expected on the back of very strong subscriptions received. However, the stock faced pressure and could never really traverse above the listing price as it closed the day at a price of ₹28.50, which is 23.91% 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 Jiwanram Sheoduttrai Industries 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 the high price of the day, while the closing price of the day was also the low price of the day.

How prices traversed for Jiwanram Sheoduttrai Industries Ltd on listing day

On Day-1 of listing i.e., on 18th September 2023, Jiwanram Sheoduttrai Industries Ltd touched a high of ₹30 on the NSE and a low of ₹28.50 per share. The high price of the day was exactly at 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. What is truly appreciable is that the stock listed well above the IPO price and even held on to gains over the IPO price, despite the Nifty falling by over 59 points on 18th September 2023 after touching a life-time peak on Friday. The stock closed at the 5% lower circuit with 36,000 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 Jiwanram Sheoduttrai Industries Ltd on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Jiwanram Sheoduttrai Industries Ltd stock traded a total of 23.16 lakh shares on NSE SME segment amounting to value of ₹678.36 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 Jiwanram Sheoduttrai Industries 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, barring some marginal correction exceptions.

At the close of Day-1 of listing, Jiwanram Sheoduttrai Industries Ltd had a market capitalization of ₹70.53 crore with free-float market cap of ₹21.15 crore. It has a total of 247.48 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 23.16 lakh shares during the day is accounted for only by delivery trades.

Brief on the business model of Jiwanram Sheoduttrai Industries Ltd

Jiwanram Sheoduttrai Industries Ltd was incorporated in 1997. It is one of the leading manufacturers of industrial safety gloves and garments. Apart from a large domestic market, the company also has a major export franchise. Jiwanram Sheoduttrai Industries Ltd has manufacturing units located at Baruipur, Nandankanan and at the Falta SEZ in West Bengal. Its exports are predominantly head-to-toe safety wear and workwear. Its operations are classified into 3 verticals. Firstly, it makes industrial leather gloves including Canadian welder gloves, driver gloves and mechanical gloves. These are typically customized to the unique customer needs. Secondly, it makes industrial garments with features like fire retardant, water repellent, high visibility, oil repellent, UV protection, anti-bacterial etc; and are also largely customized. Lastly, Jiwanram Sheoduttrai Industries Ltd also manufactures work and casual wear garments for specific industries like hospitals, hotels, etc on a made-to-order basis. It has clients spread across the US, Spain, Germany, and Belgium.

The company is a government recognized Star Export House for the manufacture and export of work and safety wear. The manufacturing operations of the company takes care of all the requisite value chain steps in-house. This includes procuring & inspecting the raw materials, segregating the raw materials, manufacturing products based on customer specifications, control & product quality assurance as well as the packaging and distribution of the finished products. This gives the company total control over the timing, inventory timing and quality of the full value chain from procurement of raw materials to delivery of the end product to the customer.

The company was promoted by Alok Prakash, Anupama Prakash, Gyan Prakash and Alok Prakash HUF. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares promoter equity share will reduce to 70.00%. The fresh issue funds will be used by the company for meeting its working capital funding gaps and for repayment of unsecured loans availed by the company. Part of the funds raised will also go towards general corporate expenses. While Affinity Global Capital Markets Private Ltd will be the lead manager to the issue, Cameo Corporate Services Ltd will be the registrar to the issue. The market maker for the issue is Giriraj Stock Broking Ltd.