Sona Machinery IPO Disappointing Debut: Lists at 12.6% Discount

Sona Machinery Makes tepid Debut 

Sona Machinery's stock made a tepid debut on the NSE SME platform today, opening at ₹125, marking a 12.59% decline from its issue price of ₹143. Despite this initial setback, the share price managed to recover nearly 4% after the weak start. Sona Machinery IPO was open for subscription from Tuesday, 5 March to Thursday,7  March. Before its debut, the company's shares were trading at a premium of ₹30 in the unlisted market. 

Despite initial projections, the actual listing price fell short of analyst expectations. The IPO had gained significant attention in the unlisted market where it traded at a premium ranging from ₹30 to ₹100. This indicated that shares were trading above the issue price. Based on this premium and the upper end of the IPO price band, analysts had estimated the listing price to be around ₹173 per share representing a roughly 20.98% increase over the IPO price of ₹143. However, upon listing, the actual price did not meet these projections.

Sona Machinery IPO Subscription and IPO Details

Sona Machinery IPO witnessed staggering subscription figures across different investor categories.HNI/NII portion gained the highest subscription reaching an impressive 554.42 times overall with 8.65 times subscriptions on the first day alone. Following closely, Retail portion saw strong interest reaching 235.06 times overall and 19.62 times on the first day. QIB portion trailed slightly achieving 129.72 times overall subscription and 6.71 times on the first day. All three segments were fully subscribed on the first day itself. The IPO as a whole gained massive attention reaching an overall subscription of 273.50 times.

Read Sona Machinery IPO Final Subscription 273.50 times

Sona Machinery IPO opened on 5 March and closed on 7 March with a price band of ₹136 to ₹143 per share. Each lot consisted of 1,000 shares with investors able to bid for a minimum of 1,000 shares and in multiples thereafter. Sona Machinery IPO was valued at ₹51.82 crore comprising a fresh issue of 3,624,000 equity shares at a face value of ₹10 each. This offering had no offer for sale component. The net proceeds will be utilized for various purposes including setting up a new manufacturing facility in Ghaziabad, repaying the balance on a letter of credit and acquiring machinery for the company's operations.

About Sona Machinery Ltd

Sona Machinery Ltd, established in 2001 specializes in manufacturing agricultural processing machinery. Its product range includes grain pre-cleaner machines, vibro classifiers,  rotary drum cleaners,  stone separator machines, paddy de-husker machines and more. They offer comprehensive solutions for agricultural machinery from engineering and installation to machine commissioning. Additionally, they provide complete solutions for the milling sector covering grain unloading, milling, pre-crushing for ethanol distilleries and rice milling from paddy unloading to rice packing. Their manufacturing facility in Ghaziabad, Uttar Pradesh spans approximately 52,205 square feet with a warehouse for storage. The company employs around 390 personnel.

Read more about Sona Machinery IPO 

To Summarize

Although the initial trading wasn't as exciting as expected, Investors will be keeping a close eye on how well it does in the next few months. India's food processing industry is on track to become one of the largest globally, expected to generate approximately $535 billion in output by 2025-26.