Shubhshree Biofuels IPO Lists at ₹189, Surges 58.8% Over Issue Price

Shubhshree Biofuels, a supplier of biomass fuels including pellets and briquettes, made a stellar debut on the Indian stock market on Monday, 16th September 2024, with its shares listing at a significant premium to the issue price. The company's initial public offering (IPO) had generated robust demand from investors during its subscription period, setting the stage for an impressive market debut.

Listing Details

• Listing Price: Shubhshree Biofuels shares were listed at ₹189 per share on the NSE SME platform, marking a strong start to its journey as a publicly traded company.
• Comparison to Issue Price: The listing price represents a substantial premium over the IPO issue price. Shubhshree Biofuels had set its IPO price at ₹119 per share.
• Percentage Change: The listing price of ₹189 on the NSE SME translates to a premium of 58.8% over the issue price of ₹119.

First-Day Trading Performance

• Opening vs. Latest Price: Following its muted opening at ₹73, Share Samadhan's share price reached ₹74.65 by 10:32 AM, up 0.88% from its opening price and slightly above the issue price.
• Market Capitalisation: As of 10:32 AM, the company's market capitalisation stood at ₹91.60 crore.
• Trading Volume: The traded volume was 3.94 lakh shares with a traded value of ₹2.83 crore, indicating moderate investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: The market reacted overwhelmingly positively to Shubhshree Biofuels' listing. The strong listing premium and hitting the upper circuit indicate robust demand and investor confidence in the company's prospects.
• Subscription Rate: The IPO was massively oversubscribed by 132.89 times, with non-institutional investors leading at 245.74 times subscription.
• Grey Market Premium: Prior to listing, shares were trading at a premium of about 63% in the grey market, which was nearly fully realised at listing.

Growth Drivers and Challenges 

Expected drivers of future performance:

• Growing demand for biomass fuels in various industries
• Expansion of production capacity
• Strong presence in northern states of India

Potential challenges:

• Competition in the biomass fuel industry
• Dependence on leased machinery for part of production
• Seasonal fluctuations in raw material availability

Utilisation of IPO Proceeds 

Shubhshree Biofuels plans to use the funds for:

• Capital expenditure towards the installation of additional plant and machinery
• Meeting working capital requirements
• General corporate purposes

Financial Performance 

The company has demonstrated strong financial growth:

• Revenue increased by 59% to ₹9,488.32 lakhs in FY2024 from ₹5,971.24 lakhs in FY2023
• Profit After Tax (PAT) rose by 36% to ₹329.77 lakhs in FY2024 from ₹242.38 lakhs in FY2023
   

As Shubhshree Biofuels begins its journey as a listed entity, market participants will closely monitor its ability to leverage its position in the biomass fuel industry to drive future growth and shareholder value.