Sangani Hospitals IPO lists at 10% premium, falls later

Strong listing for Sangani Hospitals IPO, but fails to hold on

Sangani Hospitals Ltd had a relatively strong listing on 17th August 2023, listing at a moderate premium of 10%, but subsequently losing ground and closing below the listing price, albeit still above the IPO price. Against the IPO price of ₹40 for Sangani Hospitals Ltd, the stock listed at ₹44 and closed the day lower at ₹42.25 per share. In a sense, the markets came under pressure as the Nifty fell by 100 points on the day and the Sensex fell by 388 points for the day on 17th August 2023; and the overall market pressure also contributed to the robustness of the individual stocks. It was more about weekend profit booking as traders opted to stay light ahead of the weekend and after the data from the US Fed minutes were less than flattering. However, despite such a weak day of trading, the listing of the stock was at a moderate premium of 10% although it could not sustain the gains for the day and closed lower than the listing price, although still above the IPO price.

The stock of Sangani Hospitals IPO did show an iota of strength on opening and tried to hold higher. However, the pressure of the market overall was a little too tough for the stock to handle. The stock closed above the IPO prices issue price but it tapered below the listing price for the day. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Sangani Hospitals Ltd opened 10% higher and the closing price turned out to be very close to the low price for the day while the opening price was close to the high price of the day, constricting the stock to a very narrow range. With subscription of 6.17X for the retail portion, 1.38X for the HNI / NII portion and 11.42X for the QIB portion; the overall subscription was moderate overall at 4.54X. The subscription numbers were moderately strong and that allowed the stock to list at a competitive premium even on a day when the market sentiments were very weak. However, it could not sustain the gains for the day as the selling pressure on the market was quite strong.

Stock closes Day-1 at competitive premium

Here is the pre-open price discovery for the Sangani Hospitals SME IPO on the NSE.

Data Source: NSE

The Sangani Hospitals IPO was priced in the price band of ₹37 to ₹40 via the book building format. On 17th August 2023, the stock of Sangani Hospitals Ltd listed on the NSE at a price of ₹44, a premium of 10% on the IPO issue price of ₹40. Not surprisingly, the price was discovered at the upper end of the band for the IPO. However, the stock faced pressure and could only traverse briefly above the listing price as it closed the day at a price of ₹42.25 per share, which is 5.63% above the IPO issue price but -3.98% below the listing price of the stock on the first day of listing. In a nutshell, the stock of Sangani Hospitals Ltd had closed the day very close to the low price of the stock for the trading day after opening very near to the high price of the day. Like the upper circuit price, even the lower circuit price on listing day is calculated on the listing price and not on the IPO price at a range of 5% either ways. However, the stock did not hit either the upper circuit or the lower circuit. The closing price actually turned out to be very close to the low price of the day, while the high price was near to the opening price. In short, the stock was constricted in a narrow range.

How prices traversed for Sangani Hospitals IPO on listing day

On Day-1 of listing i.e., on 17th August 2023, Sangani Hospitals Ltd touched a high of ₹44.50 on the NSE and a low of ₹41.80 per share. The high price of the day was just above the opening price of the stock while the stock closed very close to the low point of the day. What is truly appreciable is that the stock closed above the IPO price despite the overall Nifty falling by 100 points on 17th August 2023 and dipping below the psychological level of 19,400 on a closing basis for the listing day. The stock did not touch the circuit breaker either on the upside or on the downside. The close saw some pressure on the stock with 3,000 sell quantity and no buyers on the stock counter. For the SME IPOs, 5% is the upper limit and also the lower circuit on the listing price on the day of listing.

Robust volumes for Sangani Hospitals IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Sangani Hospitals Ltd stock traded a total of 12,60,000 shares on NSE SME segment amounting to value of ₹540.67 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, except for the bout of selling towards the end of the day. That also led the stock to close very near to the low point of the day. It must be noted here that Sangani Hospitals 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, Sangani Hospitals Ltd had a market capitalization of ₹58.21 crore on an overall basis. It has a total of 137.77 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 12.60 lakh shares during the day is accounted for only by delivery trades.

Brief on the business model of Sangani Hospitals Ltd

Sangani Hospitals Ltd, is an SME IPO on the NSE which is opening for subscription on 04th August 2023. The company, Sangani Hospitals Ltd, was incorporated in 2021 but the journey had begun in 2001 itself. Sangani Hospitals is a multi-specialty hospital based in Keshod in Gujarat. Sangani Hospital was promoted by Dr Ajay Sangani and his brother Dr Rajeshkumar Sangani. It currently has two multispecialty hospitals based out of Keshod and Veraval; both in the state of Gujarat. It has specialized departments for gynaecology, obstetrics, orthopedy, joint replacement, general surgery, uro-surgery, trauma unit, dental, and laparoscopic surgery.

Sangani Hospital at Keshod, Junagadh is a 36 beds multi-speciality hospital. It has primary, secondary, and tertiary care facilities. The location of the hospital makes it easily accessible to nearly 54 adjacent small villages. Sangani Hospital has been rated as one of the topmost hospitals in the district of Junagadh. They have currently applied for NABH registration. The other hospital; Sangani Super Speciality Hospital at Veraval is a 32-bed multi-speciality hospital which has already cleared NABH (National Accreditation Board for Hospitals). It has significant focus on Tertiary care facilities and is located just 45 km away from Sangani Hospital, Keshod. Sangani Super Speciality Hospital at Veraval is well equipped with medical and surgical specialities and backed by a highly qualified and experienced team of doctors.

The fresh issue funds will be used by the company for expansion related capital expenditure at the Sangani Hospital at Keshod, capex at the Sangani Multispecialty Hospital at Veraval and for general corporate purposes. While Unistone Capital Markets Private Ltd will be the lead manager to the issue, Bigshare Services Private Limited will be the registrar to the issue. The market maker for the issue is Rikhav Securities Ltd.