United Heat Transfer IPO: Lists at ₹60.95, Closes at ₹59

United Heat Transfer Limited, established in January 1995 and specializing in manufacturing heat exchangers, pressure vessels, and process flow skids for automotive and industrial applications, made a muted debut on the Indian stock market on Tuesday, 29th October 2024, with its shares listing on the NSE SME platform. The company operates two manufacturing facilities in Nashik, serving diverse industries including petrol and diesel engines, maritime vessels, and mining trucks.

Listing Details

• Listing Price: United Heat Transfer shares were listed at ₹60.95 per share at market open on NSE SME, marking a modest 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. United Heat Transfer had set its IPO price band from ₹56 to ₹59 per share, with the final issue price being fixed at the upper end of ₹59.
• Percentage Change: The listing price of ₹60.95 on NSE SME translates to a premium of 3.3% over the issue price of ₹59.

First-Day Trading Performance

• Opening vs. Latest Price: Following its muted opening, by 10:53:48 AM IST, the stock was trading at ₹59, down 3.20% from its previous closing price.
• Market Capitalisation: As of 10:53:48 AM IST, the company's market capitalisation stood at ₹112.12 crore.
• Trading Volume: The traded volume was 18.24 lakh shares with a traded value of ₹11.11 crore, with 100% deliverable quantity.

Market Sentiment and Analysis

• Market Reaction: After hitting an early high of ₹63.95, the stock experienced selling pressure.
• Subscription Rate: The IPO was oversubscribed by 83.70 times (as of October 24, 2024, 6:20:00 PM), with NIIs leading at 124.72 times subscription, followed by retail investors at 98.93 times, and QIBs at 26.56 times.
• Trading Range: As of 10:53:48 AM IST, the stock hit a high of ₹63.95 and a low of ₹57.95 during early trading.

Growth Drivers and Challenges

Expected drivers of future performance:

• Diverse customer base across multiple continents
• Skilled and knowledgeable team
• High industry standards compliance
• Strategic distribution channels and location
• Modern manufacturing infrastructure

Potential challenges:

• Inconsistency in top-line performance
• Sudden jump in bottom lines raising concerns
• Highly competitive and fragmented segment
• Working capital intensive operations

Utilisation of IPO Proceeds

United Heat Transfer plans to use the funds for:

• Repayment of debt
• Meeting incremental working capital requirements
• General corporate purposes

Financial Performance

The company has shown mixed results:

• Revenue decreased by 9% to ₹64.10 crore in FY2024 from ₹70.40 crore in FY2023
• Profit After Tax (PAT) rose by 195% to ₹6.24 crore in FY2024 from ₹2.12 crore in FY2023

As United Heat Transfer begins its journey as a listed entity, market participants will closely monitor its ability to stabilize revenue growth and maintain profitability margins. The muted listing and subsequent decline suggest cautious market sentiment despite the company's recent bottom-line growth.