SPP Polymer IPO Lists at ₹63, Surges 6.78% Over Issue Price

SPP Polymer, a manufacturer of HDPE/PP woven fabric and bags, non-woven fabrics and bags, and Multifilament Yarn, made a modest debut on the Indian stock market on Tuesday, 17th September 2024, with its shares listing at a slight premium to the issue price. The company's initial public offering (IPO) had generated decent demand from investors during its subscription period, but the stock faced selling pressure shortly after listing.

Listing Details

• Listing Price: SPP Polymer shares were listed at ₹63 per share on the NSE SME platform, marking a positive start to its journey as a publicly traded company.
• Comparison to Issue Price: The listing price represents a small premium over the IPO issue price. SPP Polymer had set its IPO price at ₹59 per share.
• Percentage Change: The listing price of ₹63 on the NSE SME translates to a premium of 6.78% over the issue price of ₹59.

First-Day Trading Performance

• Opening vs. Latest Price: Following its positive opening at ₹63, SPP Polymer's share price quickly declined to hit the lower circuit. By 11:00 AM, the stock was trading at ₹59.85, down 5% from its opening price and nearly erasing all listing gains.
• Market Capitalisation: As of 11:00 AM, the company's market capitalisation stood at ₹92.12 crore.
• Trading Volume: The traded volume was 5.32 lakh shares with a traded value of ₹3.32 crore, indicating moderate investor interest on the first day of listing.

Market Sentiment and Analysis

• Market Reaction: The market initially reacted positively to SPP Polymer's listing, but the stock faced selling pressure shortly after opening, possibly due to profit booking.
• Subscription Rate: The IPO was oversubscribed by 43.29 times, with retail investors leading at 59.87 times subscription.
• Grey Market Premium: Prior to listing, shares were trading at a premium of 25% in the grey market, which did not materialise at listing.

Growth Drivers and Challenges

Expected drivers of future performance:

• Diverse product portfolio in HDPE/PP woven fabric and bags
• Strong presence in various industries like agro-pesticides, cement, and chemicals
• ISO certifications for quality, safety, and environmental management systems

Potential Challenges:

• Competition in the polymer products industry
• Dependence on raw material prices
• Limited geographical presence

Utilisation of IPO Proceeds

SPP Polymer plans to use the funds for:

• Repayment of loans
• Meeting working capital requirements
• General corporate purposes

Financial Performance

The company has demonstrated strong financial growth:

• Revenue increased by 40% to ₹9,381.29 lakhs in FY2024 from ₹6,677.47 lakhs in FY2023
• Profit After Tax (PAT) rose by 83% to ₹99.4 lakhs in FY2024 from ₹54.42 lakhs in FY2023

As SPP Polymer begins its journey as a listed entity, market participants will closely monitor its ability to leverage its diverse product portfolio and industry presence to drive future growth and shareholder value. The muted listing and subsequent decline suggest that investors may be taking a cautious approach to the company's near-term prospects in the competitive polymer products sector.