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Rexpro Enterprises Lists at 19% Discount, Hits Lower Circuit on NSE SME
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Last Updated: 29th January 2025 - 04:23 pm
Rexpro Enterprises Limited, a furniture manufacturing company operating since March 2012, marked a disappointing entry into the public markets on Wednesday, January 29, 2025. The company, which has established itself manufacturing furniture and fixtures for major retail clients like Shoppers Stop, Samsung, and Hindustan Unilever from its three manufacturing units in Vashi, Maharashtra, commenced trading on NSE SME significantly below expectations.
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Rexpro Enterprises Listing Details
The company's market debut reflected investor concerns about valuation and growth sustainability:
- Listing Time & Price: When trading commenced at market open, Rexpro Enterprises shares debuted at ₹117 on NSE SME, showing a significant discount of 19% to IPO investors against the issue price of ₹145. This weak opening fell considerably short of grey market expectations, which had indicated a premium of ₹10 over the issue price.
- Issue Price Context: The disappointing debut came after the company had fixed the issue price at ₹145 per share. Despite strong subscription numbers, the pricing appears to have been viewed as aggressive by the market given the company's size and sector dynamics.
- Price Evolution: By 11:03 AM IST, the stock faced further selling pressure, declining to ₹111.15 and hitting the lower circuit, representing a loss of 23.34% from the issue price, demonstrating continued negative sentiment throughout the early trading session.
First-Day Trading Performance
The trading activity showed measured participation with bearish sentiment:
- Volume and Value: Within the first few hours, 2.76 lakh shares changed hands, generating a turnover of ₹3.22 crore. Notably, 100% of traded shares were marked for delivery, indicating investor positioning rather than speculative trading.
- Demand Dynamics: The stock's trading pattern showed overwhelming selling pressure with offers for 3.82 lakh shares with no buyers at current levels, reflecting strong negative sentiment post lower circuit.
Market Sentiment and Analysis
- Market Reaction: Weak opening followed by lower circuit
- Subscription Rate: The IPO was moderately oversubscribed by 17.67 times
- Limited Market Interest: The relatively modest subscription levels compared to peer SME listings may have contributed to the weak debut
Growth Drivers and Challenges
Expected drivers of future performance:
- Diverse product range with customization
- Strong quality control practices
- Multiple manufacturing facilities
- Long-term customer relationships
- Experienced management team
- Growing client base
Potential challenges:
- Sudden profit growth sustainability
- High competition
- Market fragmentation
- Working capital needs
- Customer concentration risk
- Aggressive valuation concerns
Utilisation of IPO Proceeds
The ₹53.65 crore raised (₹47.13 crore fresh issue) will be used for:
- Equipment purchase and factory renovation
- Meeting working capital requirements
- Pursuing inorganic growth
- General corporate purposes
Rexpro Enterprises Financial Performance
The company has shown mixed results:
- Revenue increased to ₹83.01 crore in FY2024 from ₹62.89 crore in FY2023
- H1 FY2025 (ended September 2024) showed revenue of ₹49.56 crore with PAT of ₹4.08 crore
- Net worth of ₹13.08 crore as of September 2024
- ROE of 56.24% indicating strong profitability metrics
As Rexpro Enterprises begins its journey as a listed entity, market participants will closely monitor its ability to sustain recent growth rates and improve operational metrics. The weak listing and continued selling pressure suggest investor skepticism about the company's aggressive valuation multiples and sudden profit growth, despite its established presence in the furniture manufacturing sector and relationships with marquee clients. The management's ability to demonstrate sustainable growth and profitability will be crucial for any potential stock price recovery.
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