Royal Arc Electrodes Lists Flat at Issue Price on NSE SME, Shows Positive Momentum

Royal Arc Electrodes Limited, a welding consumables manufacturer operating since 1996, made a steady entry into the public markets on Monday, February 24, 2025. The company, which specializes in manufacturing welding electrodes, flux cored wire, and MIG/TIG wires from its Gujarat facility, commenced trading on NSE SME at par with its issue price before showing strength in early trading.

Royal Arc Electrodes Listing Details 

The company's market debut presented an evolving picture between initial pricing and subsequent market response:

• Listing Time & Price: When trading commenced at market open, Royal Arc Electrodes shares debuted at ₹120 on NSE SME, exactly at par with the issue price of ₹120. This flat opening came after the IPO's moderate subscription of 1.6 times, with primarily retail investor interest.
• Issue Price Context: The company had fixed the IPO price at ₹120 per share. While the initial response was muted, subsequent trading suggested investors were gaining confidence in the company's manufacturing capabilities and export presence.
• Price Evolution: By 11:23 AM IST, the stock showed positive momentum, trading at ₹121.10 after hitting an intraday high of ₹122.40, representing an encouraging gain of 2% from the issue price.

First-Day Trading Performance of Royal Arc Electrodes

The trading activity showed robust participation with bullish sentiment:

• Volume and Value: Within the first few hours, trading volume reached 6.50 lakh shares, generating a turnover of ₹7.84 crore, with 100% of traded quantity marked for delivery.
• Demand Dynamics: The stock's trading pattern showed strong buying interest with orders for 1,03,200 shares against sell orders for 73,200 shares, indicating sustained demand at current levels.

Market Sentiment and Analysis

• Market Reaction: Flat opening followed by gradual strength
• Subscription Rate: The IPO had been subscribed 1.6 times overall
• Category-wise Response: Retail portion showed strongest interest at 2.2 times, followed by QIB at 1.04 times.

Growth Drivers and Challenges 

Expected drivers of future performance:

• Geographic diversity in operations
• Strong customer relationships
• Consistent financial performance
• Experienced management team
• Quality certifications
• Export capabilities

Potential challenges:

• Raw material price volatility
• Competition intensity
• Working capital needs
• Technology evolution
• Regulatory compliance costs
• Margin sustainability concerns

Utilisation of IPO Proceeds 

The ₹36 crore raised through combined fresh issue (₹21.60 crore) and offer for sale (₹14.40 crore) will be used for:

• Manufacturing facility expansion in Gujarat
• Working capital requirements
• General corporate purposes

Financial Performance of Royal Arc Electrodes

The company has shown strong growth:

• Revenue of ₹100.99 crore in FY2024
• H1 FY2025 (ended September 2024) showed revenue of ₹46.06 crore with PAT of ₹3.18 crore
• Net Worth of ₹45.45 crore as of September 2024
• Minimal borrowings of ₹2.02 crore
• Total assets of ₹55.69 crore as of September 2024

As Royal Arc Electrodes begins its journey as a listed entity, market participants will closely monitor its ability to execute its expansion plans while maintaining operational efficiency. The flat listing followed by positive momentum suggests investors are gradually warming up to the company's business model and growth prospects. The company's ability to leverage its manufacturing capabilities and export presence while managing costs will be crucial for sustaining investor confidence and supporting long-term value creation.