Karnika Industries IPO Listed at 6.58% higher, edges up further

Karnika Industries IPO edges higher after a modest listing

Karnika Industries Ltd had a modest listing on 12th October 2023, listing at a modest premium of 6.58%, and subsequently edging slightly above the listing price of the day. Of course, the stock closed comfortably above the IPO issue price and the IPO listing price for the day. For the day, the Nifty closed 17 points lower while the Sensex closed with losses of 65 points for the day. Both the Nifty and the Sensex have now seen a moderate fall after two days of a frenetic rally in the markets. The listing of the stock of Karnika Industries Ltd was relatively modest on the day of listing, so the flat to weak markets did not have a great impact as the stock managed to edge higher after the listing, although it still remained well below the upper circuit for the day.

With subscription of 2.91X for the retail portion, and 3.22X for the HNI / NII portion; the overall subscription was very modest at 3.07X. The IPO was a fixed price issue with the IPO price fixed at ₹76 per share. The stock listed with a modest premium of 6.58% and the positive sentiments sustained in the stock despite the flat to weak sentiments in the market. Subsequent to the listing, the stock not only held the gains but also closed the day higher despite the negative sentiments in the Nifty and the Sensex overall. The performance of the stock for the day must be seen in the light of the fact that the day was not too conducive to listing and also the subscription levels of the stock were not too flattering.

Stock closes Day-1 above the listing price; but only just

Here is the pre-open price discovery for the Karnika Industries IPO on the NSE.

Data Source: NSE

The SME IPO of Karnika Industries Ltd was priced at ₹76 per share, being a fixed priced IPO. On 12th October 2023, the stock of Karnika Industries Ltd listed on the NSE at a price of ₹81, a premium of 6.58% over the IPO issue price of ₹76 per share. However, the stock got a edged up further from the listing price and closed the day at a price of ₹82.85 which is 9.01% above the IPO issue price of ͭ₹76 per share and a full 2.28% above the listing price of the stock at ₹81 per share on the first day of listing. In a nutshell, the stock of Karnika Industries Ltd had closed the day above the IPO issue price and also above the listing price of the day, although the gains cannot be called anything breathtaking.

What matters is that this happened despite very tepid subscriptions at the IPO and a weak day of listing for the markets overall. The stock had an interesting move pattern for the day. It opened at ₹81 per share and that also turned out to be the low price of the day. The stock did not go below the listing price at any time during the day. However, on the upside, the stock did touch the upper circuit limit of ₹85.05 per share, which is the high price of the day. But, the stock failed to sustain the upper circuit and eventually closed lower, albeit still higher than the listing price. Being an SME IPO stock, it is constrained by the 5% upper circuit limit for the day as well as the 5% lower circuit limit for the day overall.

How prices traversed for Karnika Industries IPO on listing day

On Day-1 of listing i.e., on 12th October 2023, Karnika Industries Ltd touched a high of ₹85.05 on the NSE and a low of ₹81 per share. The opening price of ₹81 per share also happened to be the low price of the day and the stock did not go below the opening price of the day at any point of time. That is signal of strength in the stock even on a volatile day. On the upper side, the stock did touch the upper circuit of ₹85.05, which is also the high price of the day. However, the stock could not sustain higher levels due to the pressure of weak markets and low subscriptions in the IPO, which led the stock to eventually close higher than the listing price, but below the upper circuit price of the day.

In fact, the stock was quite volatile during the day. The closing price of the day, was below the upper circuit price, although it did touch that price during the day. The stock had its share of gyrations during the day, but closed moderately strong. This was also triggered by the modest fall in the Nifty and the Sensex, which kept a tab on any gains in the stock. The stock closed with gains, but could not sustain the upper circuit, despite touching it. For the SME IPOs, it may be recollected, that 5% is the upper limit and also the lower circuit on the listing price on the day of listing. Incidentally, the stock hit the upper circuit during the day, but could not sustain it, but still closed with gains for the day.

Robust volumes for Karnika Industries IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Karnika Industries Ltd stock traded a total of 16.656 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹1,369.62 lakhs on the first day.  This is above the median volumes that stocks get to see on the first day of listing on the NSE SME segment. 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 led the stock to touch the upper end of the circuit filter before giving up gains but still closing above the listing price. It must be noted here that Karnika 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 of 16.656 lakh shares purely represents the delivery volumes only.

At the close of Day-1 of listing, Karnika Industries Ltd had a market capitalization of ₹102.73 crore with free-float market cap of ₹27.34 crore. It has a total of 123.995 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 16.656 lakh shares during the day is accounted for only by delivery trades only, barring some market trade exceptions that may arise from time to time.