Azad Engineering IPO Lists at 37.40% premium; falls later

Strong listing for Azad Engineering Ltd, but tapers later

Azad Engineering IPO had a very robust listing on 28th December 2023, listing at a smart premium of 37.40%, but it failed to hold on to the listing gains and fell towards the close of trade on 28th December 2023. While the closing price on 28th December 2023 was surely above the IPO issue price for the day, it closed below the listing price of the IPO. For the day, the Nifty closed 124 points higher while the Sensex closed a full 372 points higher. Both the Nifty and the Sensex have been at all-time highs and that has sustained for the last few days. However, the post-listing weakness in the price of Azad Engineering IPO on the day of listing was more a direct outcome of the strong premium opening for the stock, which led to profit booking at higher levels. However, as we shall see later, the price of Azad Engineering IPO did come under pressure post listing and closed the day very near to its low price.

IPO subscription and pricing details for Azad Engineering Ltd

The stock had seen a very strong subscription in the IPO. The subscription was 83.04X  overall and QIB subscription was at 179.64X. In addition, the retail portion had got subscribed 24.51X in the IPO while the HNI / NII portion also got a healthy subscription of 90.24X. Hence the listing was expected to be fairly strong for the day. However, while the listing was strong, the post listing performance was not up to the mark. Remember, the circuit filter for most mainboard IPOs is kept at 20% above and below the listing price of the day on the day of listing. In the case of Azad Engineering Ltd, the strong subscription allowed price discovery at the upper end of the band and got a good listing, but the close was less than satisfactory. Here is the Azad Engineering Ltd listing story on 28th December 2023.

The IPO price was fixed at the upper end of the band at ₹524 per share which was anyways along expected lines considering the relatively strong subscription in the IPO. The price band for the IPO was ₹499 to ₹524 per share. On 28th December 2023, the stock of Azad Engineering Ltd listed on the NSE at a price of ₹720 per share, a strong premium of 37.40% above the IPO issue price of ₹524 per share. On the BSE also, the stock listed at ₹710 per share, a premium of 35.50% over the IPO issue price of ₹524 per share.

How the stock of Azad Engineering Ltd closed on both exchanges

On the NSE, Azad Engineering Ltd closed on 28th December 2023 at a price of ₹673.25 per share. That is a first day closing premium of 28.48% on the issue price of ₹524 per share. However, it marks a discount of -6.49% below the listing price of ₹720 per share. In fact, the listing price turned out to be closer to the high price of the day and the stock traded almost for the entire trading day below the opening listing price. On the BSE also, the stock closed at ₹677.10 per share. That represents a first day closing premium of 29.22% above the IPO issue price of ₹524 per share. However, the closing price for the day represented a discount of -4.63% on the listing price on the BSE at ₹710 per share. On both the exchanges, the stock listed strongly above the IPO issue price and also managed to close Day-1 above the IPO issue price. However, the pressure of selling was visible on the counter in both the stock exchanges. On both the stock exchanges (BSE and the NSE), the listing price was closer to the high price of the day while the closing price was closer to the low price of the day, showing the extent of pressure on the stock during the day.

Remember, that the company is subject to 20% circuit filters on both side. The upper circuit filter on the NSE was ₹864 per share while the lower circuit price on the NSE was ₹576 per share. In comparison, the high price of the day at ₹727 per share was much below the upper circuit price. Even the low price of the day at ₹670 per share was much above the lower circuit limits for the day. As stated earlier, on both the stock exchanges, the stock was under pressure post listing and closed very near to the low price of the day.

Price volume story on the NSE

The table below captures the opening price discovery in the pre-open period on the NSE.

Data Source: NSE

Let us look at how the stock traversed on the National Stock Exchange (NSE) on 28th December 2023. On Day-1 of listing, Azad Engineering Ltd touched a high of ₹727 per share on the NSE and a low of ₹670 per share. The premium to the IPO price sustained through but the premium to the listing price could not really be sustained and it turned into discount to listing price. While the stock was volatile during the day, what stood out about the performance on the exchange during the day was that the opening was close to the high and the closing was very near to the low price of the day. Mainboard IPOs do not have an upper circuit of 5%, unlike SME IPOs since they trade in the normal equity segment and not in the trade to trade segment. However, on listing day, this IPO was subjected to the standard 20% upper and 20% lower circuit limit.

The High Price of the day at ₹727 per share was well below the upper circuit price of ₹864 per share. Similarly, the Low Price of the day at ₹670 per share was well above the lower circuit price of ₹576 per share. On Day-1 of listing, the Azad Engineering Ltd stock traded a total of 151.07 lakh shares on NSE amounting to value of ₹1,068.74 crore during the day.  The total turnover (traded value) on the NSE during the day was 26.85% of the market capitalization of the company on the first day of trading. Market cap is the product of the number of outstanding shares and the closing price. The order book during the day showed a lot of back and forth with the bias clearly in favour of the sellers, with serious selling emerging towards the end. The stock closed the day with pending unfulfilled sell orders of on the NSE to the tune of 37,371 shares.

Price volume story on the BSE

Let us look at how the stock traversed on the Bombay Stock Exchange (BSE) on 28th December 2023. On Day-1 of listing, Azad Engineering Ltd touched a high of ₹727.50 per share on the BSE and a low of ₹670.05 per share. The premium to the IPO price sustained through but the premium to the listing price could not really be sustained and it turned into discount to listing price. While the stock was volatile during the day, what stood out about the performance on the exchange during the day was that the opening was close to the high and the closing was very near to the low price of the day. Mainboard IPOs do not have an upper circuit of 5%, unlike SME IPOs since they trade in the normal equity segment and not in the trade to trade segment. However, on listing day, this IPO was subjected to the standard 20% upper and 20% lower circuit limit.

The High Price of the day at ₹727.50 per share was well below the upper circuit price of ₹812.50 per share. Similarly, the Low Price of the day at ₹670.05 per share was well above the lower circuit price of ₹541.70 per share. On Day-1 of listing, the Azad Engineering Ltd stock traded a total of 7.80 lakh shares on BSE amounting to value of ₹55.13 crore during the day. The total turnover (traded value) on the BSE during the day was 1.38% of the market capitalization of the company on the first day of trading. Market cap is the product of the number of outstanding shares and the closing price. The order book during the day showed a lot of back and forth with the bias clearly in favour of the sellers, with serious selling emerging towards the end. The stock closed the day with pending unfulfilled sell orders of on the BSE also.

 Market capitalization, free float, and delivery volumes

While the volumes on the BSE were not as much as on the NSE, the trend was once again the same. The order book through the day showed a lot of pressure and that almost sustained till the close of trading session. Despite the sharp rally in the Nifty and the Sensex, the stock of Azad Engineering Ltd could not sustain these gains. However, it must be said that this sharp bounce in the market also led the stock to not fall too sharply despite a relatively strong bout of selling in the counter. On the NSE, out of the total 151.07 lakh shares traded during the first day of trading, the deliverable quantity represented 68.48 lakh shares or a deliverable percentage of 45.33% on the NSE, which is at par with the routine listing day median.

That shows very moderate delivery action in the counter. Even on the BSE, out of the total 7.80 lakh shares of quantity traded, the deliverable quantity at a gross across client level was 3.12 lakh shares representing total deliverable percentage of 40.04%, which is lower than the delivery ratio on the NSE and also below the median. Unlike the SME segment stocks, which are on T2T on the day of listing, the mainboard IPOs permit intraday trading even on the day of listing.

At the close of Day-1 of listing, Azad Engineering Ltd had a market capitalization of ₹4,002.54 crore with free-float market cap of ₹680.43 crore. Azad Engineering Ltd has issued capital of 591.13 lakh shares with a par value of ₹2 per share. The stocks will be held in the demat account vide ISIN Number (INE02IJ01035).