Cell Point IPO lists flat but closes 5% lower

Cell Point IPO had a tepid listing on 28th June 2023, listing exactly at the issue price but closing a full 5% lower. It was rather ironic because the stock had a weak listing on a day when the markets were exceptionally buoyant. For a long time, the Nifty had struggled to breach above the 18,800 mark. However, on 28th June 2023, the Nifty not only opened above the 18,900 mark but it also briefly crossed the 19,000 level before closing the day slightly below that level. The markets were buoyed by factors like the reducing hawkishness of the US Federal Reserve, the RBI keeping rates on pause, sharply lower inflation, better growth, and a current account deficit that was just 0.2% of GDP in the fourth quarter. Above all, the news of the HDFC merger going through in July also helped markets scale higher levels as it would be positive for a number of large companies in terms of additional flows. However, despite the positivity in the market on 28th June 2023, the stock of Cell Point (India) Ltd listed in an extremely tepid fashion, which was evident from tapering GMP.

The stock of Cell Point IPO hardly showed any  strength during the day, and closed below the listing price as well as the issue price on the first day of trading on the NSE. It had opened for trade exactly at the IPO price. Being an NSE SME IPO, it is only traded on the SME segment of NSE. Cell Point (India) Ltd opened flat at ₹100 (which is also the fixed IPO price of the stock) but then consistently drifted lower before closing at the 5% lower circuit for the day. With subscription of 7.92X for the retail portion and 4.11X for the HNI / NII portion; the overall subscription was moderate at 6.03X. The subscription did not set the counter on fire, but it was not so bad as to list at a discount on a bullish trading day.

Cell Point IPO was priced at ₹100 via fixed price format. On 28th June 2023, the stock of Cell Point (India) Ltd listed on the NSE SME segment at a price of exactly ₹100, which is also the issue price of the IPO. However, through the day, the stock never bounced from these levels but only drifted lower. The opening price of ₹100 also turned out to be the high price of the day and it drifted lower for the day. Eventually, the stock closed at the lower 5% circuit for the day.

On Day-1 of listing i.e., on 28th June 2023, Cell Point (India) Ltd touched a high of ₹100 on the NSE and a low of ₹95 per share. The opening price turned out to be the high point while the stock closed at the low point of the day. Incidentally, the closing price also represented the 5% lower circuit price of the stock for the day, which is the maximum that the SME IPO stock is allowed to move on the day of listing. What is surprising is that the stock showed weakness on a day when the Nifty was sharply higher by 155 points and had broken through some importance resistance levels apart from touching life-time highs. The stock closed at the 5% lower circuit with 75,600 sell quantity and no buyers. For the SME IPOs, 5% is the lower limit over the listing price on the day of listing.

Let us now turn to the volumes of the stock on the NSE SME IPO segment. On Day-1 of listing, the Cell Point (India) Ltd stock traded a total of 19,27,200 shares on NSE SME segment amounting to value of ₹1,926.62 lakhs on the first day.  The order book during the day showed a lot of selling with the sell orders consistently exceeding the buy orders at any point of time. That also pushed the stock to close at the lower end of the circuit filter. It must be noted here that Cell Point (India) 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 of 19.27 lakh shares as reported on the NSE SME segment purely represents the delivery volumes.

At the close of Day-1 of listing, Cell Point (India) Ltd had a market capitalization of ₹177.51 crore with free-float market cap of ₹47.93 crore. It has a total of 186.86 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 19.27 lakh shares during the day is accounted for only by delivery trades. The table below shows the NSE pre-open price for Cell Point (India) Ltd.

Data Source: NSE

Let us now quickly understand the business model of Cell Point (India) Ltd. The company is one of the largest retail outlets for mobile phones and other electronic accessories in South India. The company was incorporated in the year 2001, and offers a physical and virtual platform for multi-brand retail selling of Smart Phones, tablets, mobile accessories, and mobile-related products. It sells products manufactured by most of the top names in this space including  Apple, Samsung, Oppo, Realme, Nokia, Vivo, Xiaomi, Redmi, and Oneplus. It offers an omnichannel approach to its products.

While mobile phones are the main driving product for the company, it is also engaged in multi-brand retailing of other consumer durable electronics goods like Smart TVs of various brands like Xiaomi, Realme, and One Plus. The company has over 75 stores across the state of Andhra Pradesh, where it is headquartered, and its principal operations are in the port city of Vizag. Out of the 75 stores, 2 stores are owned properties and 73 stores are on leased properties. The company has positioned its retail outlets as a one-stop shop for all your mobile needs; which is useful from a consumer positioning point of view.