Proventus Agrocom IPO Lists at 6.49% premium, gains further

Proventus Agrocom IPO had a moderate to strong listing on 05th June 2023, listing at a premium of 6.49% on the NSE SME-IPO segment, but subsequently gaining still further to decisively close above the IPO price and also the listing price. In a sense, the markets were positive on Monday and that helped sentiments on the stock as the Nifty closed on the threshold of the 18,600 mark; well above its last resistance level of 18,400. On a day when the market sentiments were strong, Proventus Agrocom IPO managed to open with moderate gains but closed at the upper circuit of the day; with smart gains for the listing day. For now, the headwinds like the debt ceiling deal, the negative news flows on banks and the possible global slowdown due to excess hawkishness of central banks are reducing. However, despite these challenges, the stock of Proventus Agrocom Ltd managed to hold strong for the day on listing day, despite a very moderate listing.

The stock of Proventus Agrocom IPO 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. Proventus Agrocom IPO opened 6.49% higher and the opening price turned out to be the low price for the day. With subscription of 4.30X for the non-retail portion, 0.74X for the retail portion and overall subscription at around 2.61X; the listing day performance was better than expected. The subscription numbers were fairly tepid with retail portion undersubscribed. However, the stock still showed a strong listing and closure on listing day, due to its rather unique business model, that is in sync with the changing eating fads of the times.

Proventus Agrocom IPO was priced at fixed price level of ₹771 via fixed price issue. On 05th June 2023, the stock of Proventus Agrocom Ltd listed on the NSE SME-IPO segment at a price of ₹821, a premium of 6.49% on the IPO issue price of ₹771. However, the stock bounced sharply even from these levels as the opening price became the low point for the day and the stock closed exactly at the high point of the day. The closing price of ₹862.05, which is 11.81% above the IPO price and 5% above the listing price of the stock on the first day of listing was also the high point of the day. In a nutshell, the stock of Proventus Agrocom 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 of 5% on listing day is calculated on the listing price and not on the IPO price. The opening price actually turned out to be the low price of the day. In SME IPOs, the 5% movement is the maximum permitted to circuit.

On Day-1 of listing i.e., on 05th June 2023, Proventus Agrocom Ltd touched a high of ₹862.05 on the NSE and a low of ₹821 per share. The opening price turned out to be the low point while the stock closed exactly 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 subscription levels in the IPO being below the normal expectation in such SME IPOs on the NSE SME segment. The stock closed at the 5% upper circuit with 41,920 buy quantity and no sellers. For the SME IPOs, 5% is the upper limit over the listing price on the day of listing.

Let us now turn to the volumes of the stock on the NSE SME IPO segment. On Day-1 of listing, the Proventus Agrocom Ltd stock traded a total of 1,73,280 shares on NSE SME segment amounting to value of ₹1,438.93 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 Proventus Agrocom 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, Proventus Agrocom Ltd had a market capitalization of ₹295.47 crore. It has a total of 34,27,541 shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 1.73 lakh shares during the day is accounted for only by delivery trades.

Here is a quick background of the company. Proventus Agrocom SME IPO on the NSE which opened for subscription on 24th May 2023 and has listed on the NSE on 05th June 2023. The company was set up in 2015 as an innovative health food brand and its portfolio comprises of dry fruits, nuts, seeds, and berries. It is part of the healthy snack value chain, which is seeing rising demand in India. They are present in the entire value chain from origination to distribution; something like a farm to fork model. The healthy snack with a strong dry fruit presence has been a gap in India. Proventus offers dry fruits and berries like almonds, pistachios, cashews, walnuts, and raisins as part of the package.

Proventus Agrocom has tried to position itself as a one-stop shop for all healthy snacking solutions. It keeps progressively moving up the value chain to enhance margins. The idea behind the business model of Proventus Agrocom Ltd is to capture the demand and supply stream by developing a strong base of sourcing and distribution. In last few years, there has been a perceptible shift in consumer preference from unbranded products to branded products; and this trend is quite strong even in tier-2 cities and not just an urban phenomenon. The company sees this trend getting more pronounced in the coming years and wants to ride on that. The company will utilize the fresh funds for working capital needs of the parent company and also its subsidiary.