Magson Retail & Distribution Ltd lists at 40.23% premium; gains further

Magson Retail & Distribution Ltd had a strong listing on 06th July 2023, listing at a sharp premium of 40.23%, but subsequently bounced and closed above the listing price at the close of trading. In a sense, the Nifty surged by 99 points and closed absolutely at the threshold of the 19,500 mark. This helped the stock of Magson Retail & Distribution Ltd IPO to hold on and closed with smart gains on the listing day. Several positive factors weighed on the markets on 06th July 2023. For instance, the stock of Magson Retail and Distribution 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.

The stock of Magson Retail and Distribution 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. Magson Retail & Distribution Ltd opened 40.23% higher and the opening price gave the stock a lot of support during the day. With subscription of 7.38X for the retail portion and 6.09X for the HNI / NII portion; the overall subscription was moderately healthy at 6.74X. The subscription numbers were not too strong but it allowed the stock to list at a healthy premium and then sustain the premium post listing.

The SME IPO of Magson Retail & Distribution Ltd was priced at ₹65 via fixed price format. On 06th July 2023, the stock of Magson Retail & Distribution Ltd listed on the NSE at a price of ₹91.15, a premium of 40.23% on the IPO issue price of ₹65. However, the stock bounced sharply after a volatile session and it closed the day at a price of ₹95.70, which is 47.23% 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 Magson Retail & Distribution 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. The opening price actually turned out to be the base on which the stock gained 5% at close.

On Day-1 of listing i.e., on 06th July 2023, Magson Retail & Distribution Ltd touched a high of ₹95.70 on the NSE and a low of ₹86.60 per share. The stock did go below the opening price but took support and bounced back sharply to close at the upper circuit for 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 Nifty facing resistance at the 19,500 levels and the stock also falling during the day. The stock closed at the 5% upper circuit with 18,000 buy quantity and no sellers. For the SME IPOs, 5% is the upper limit over the listing price on the day of listing. The table below captures the price discovery in the pre-open session for the IPO.

Data source: NSE

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Magson Retail & Distribution Ltd stock traded a total of 9.42 lakh shares on NSE SME segment amounting to value of ₹852.79 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 Magson Retail & Distribution 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, Magson Retail & Distribution Ltd had a market capitalization of ₹75.12 crore with free-float market cap of ₹22.49 crore. It has a total of 78.50 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 9.42 lakh shares during the day is accounted for only by delivery trades.
Magson Retail and Distribution Ltd, is an SME IPO on the NSE SME segment which had opened for subscription on 23rd June 2023. The company, Magson Retail and Distribution Ltd, was incorporated in the year 2018, so it is just about 5 years old. It is engaged in the retail and the distribution business of gourmet, frozen foods, and specialty foods. Some of the products that the company distributes through its channels include cheese and dairy products, exotic vegetables and fruits, ambient products, and luxury chocolates. It caters to a very niche audience that is quite fastidious about its needs but not too price conscious. That helps them maintain margins even in tough conditions.

Back in 2009, the idea of Magson to serve the customers with premium quality gourmet, frozen & global food products came to life with the launch of the first Magson store by Rajesh Francis and Manish Pancholi under the guidance of Raaj Maganlal. Since its inception in 2009, the brand has evolved considerably as a very unique and one-of-a-kind specialty store. It caters to the wide-ranging needs of the customer and has emerged as a preferred choice for Frozen & Gourmet Foods by most of the customers of the city of Ahmedabad, the commercial capital of the state of Gujarat. It has over 1.50 lakh customers transaction on a regular basis.