Srivari Spices and Foods IPO lists at 141.67% premium, rallies higher

Strong listing for Srivari Spices and Foods Ltd, and an upper circuit

Srivari Spices and Foods IPO had a strong listing on 18th August 2023, listing at a sharp premium of 141.67%, but subsequently gaining further and hitting the 5% upper circuit over the listing price. Of course, the stock closed comfortably above the IPO issue price. This was despite the fact that, the markets came under pressure as the Nifty fell by 55 points on the day and the Sensex fell by over 200 points 18th August 2023.

It was more about weekend profit booking as traders chose to stay light ahead of the weekend and after a very strong rally in the markets over the last few weeks, when the Nifty had reached the precincts of the 20,000 levels. However, despite such a weak day of trading, the listing of the stock was at a smart premium of 141.67% and to add to that it rallied further to close at the 5% upper circuit for the day. For the SME stocks, they are in mandatory T2T segment and hence 5% circuit is the maximum they are allowed to move either ways.

How subscriptions influenced listing price of Srivari Spices and Foods Ltd

The stock of Srivari Spices and Foods IPO did show a lot of strength on opening and even managed to hold higher and hit the upper circuit. This is despite the pressure of the market overall which corrected during the day. The stock closed above the IPO prices issue price and also well above the listing price to close at 5% upper circuit on the listing price of the stock. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Srivari Spices and Foods Ltd opened 141.67% higher and the opening price turned out to be low price for the day while the stock closed at the high price of the day.

With subscription of 517.95X for the retail portion, 786.11X for the HNI / NII portion and 79.10X for the QIB portion; the overall subscription was extremely healthy at 450.03X. The subscription numbers were so strong that it allowed the stock to list at a huge premium even on a day when the market sentiments were very weak. Despite the tepid market conditions, the stock opened at a huge premium and closed the day at the 5% upper circuit for the day.

Stock closes Day-1 at substantial premium

Here is the pre-open price discovery for the Srivari Spices and Foods IPO on the NSE.

Data Source: NSE

The SME IPO of Srivari Spices and Foods Ltd was priced in the price band of ₹40 to ₹42 via the book building format. On 18th August 2023, the stock of Srivari Spices and Foods Ltd listed on the NSE at a price of ₹101.50, a premium of 141.67% on the IPO issue price of ₹42. Not surprisingly, the price was discovered at the upper end of the band for the IPO. However, the stock appeared to defy gravity during the day as it continued to rally despite the fall in the markets overall.

For the day, the stock closed at a price of ₹106.55, which is 153.69% above the IPO issue price and 4.98% above the listing price of the stock on the first day of listing. In a nutshell, the stock of Srivari Spices and Foods Ltd had closed the day exactly at the upper circuit price for the stock of 5% with only buyers and no sellers on the counter at the closer. Like the lower circuit price, even the upper circuit price on listing day is calculated on the listing price and not on the IPO price. The opening price actually turned out to be the low price for the day while the stock closed the day exactly at the high price for the day of listing.

How prices traversed for Srivari Spices and Foods Ltd on listing day

On Day-1 of listing i.e., on 18th August 2023, Srivari Spices and Foods Ltd touched a high of ₹106.55 on the NSE and a low of ₹101.50 per share. The high price of the day was also the closing price of the day, which represented the 5% upper circuit level for the stock. The low price day was the listing price and the stock never really went below that price during the entire trading day.

The 5% circuit filter is the maximum that the SME IPO stock is allowed to move in the day. What is truly appreciable is that the stock closed very strong despite the overall Nifty falling by over 55 points on 18th July August 2023 and dipping very close to the psychological level of 19,300 on a closing basis for the listing day. The stock closed at the 5% upper circuit with only buyers and no sellers. 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 Srivari Spices and Foods Ltd on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Srivari Spices and Foods Ltd stock traded a total of 12.42 lakh shares on NSE SME segment amounting to value of ₹1,289.82 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.

That also led the stock to close at the upper end of the circuit filter. It must be noted here that Srivari Spices and Foods 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, barring some very minor adjustment exceptions.

At the close of Day-1 of listing, Srivari Spices and Foods Ltd had a market capitalization of ₹76.10 crore with free-float market cap of ₹22.88 crore. It has a total of 71.42 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 12.42 lakh shares during the day is accounted for only by delivery trades, barring some very small exceptions.

Brief on the business model of Srivari Spices and Foods Ltd

Srivari Spices and Foods Ltd, is an SME IPO on the NSE which is opening for subscription on 07th August 2023. The company, Srivari Spices and Foods Ltd, was incorporated in the year 2019 to manufacture spices and flour (chakki atta). The company also has a complete marketing network to take care of the after production sales and marketing of the products. Its principal product categories include spices, masala and atta.

While its spices get delivered to over 3,000 outlets, its atta gets delivered to more than 15,000 outlets. Its whole wheat and sharbati atta are quote popular in the states of Andhra Pradesh and Telangana. Its production methods are predominantly organic with limited use of artificial preservatives and chemicals to keep the original flavour of the product intact. It has a direct to customer (D2C) sales model as well as a business to business (B2B) marketing model to cater to institutional and corporate customers.

The company has two production facilities at Ranga Reddy district, adjoining Hyderabad. The company has tried to maintain a sustainable model. The raw materials are sourced directly from the farmers and then processed at their manufacturing plants located near Hyderabad. In 2020, the company had expanded its product portfolio to include sambar masala, chicken masala, garam masala and mutton masala.

Sourcing the raw materials directly from the farmers gives the company a pricing advantage which is a competitive edge in a crowded market. The company is also looking to expand its products globally, especially in countries with a vast expatriate population, which would be a logical market extension to the domestic market. In terms of revenue contribution, spices contribute 79% of revenues while wheat flour contributes 21%.