Net Avenue Technologies IPO lists 133.33% up but later hits -5% circuit

Strong listing for Net Avenue Technologies IPO, then lower circuit

Net Avenue Technologies IPO had an absolutely strong listing on 08th December 2023, listing at a premium of 133.33%. However, after a strong opening, the stock struggled under the selling pressure and closed the day at the -5% lower circuit on the listing price. For the day, the stock closed well below the IPO issue price but below the IPO listing price. Despite a strong listing and strong markets overall, the stock of Net Avenue Technologies IPO, closed on 08th December 2023 at the -5% lower circuit. It must be noted here that the Nifty and Sensex were very strong on Friday and despite that the stock very strong but closed at the lower circuit for the day.

On 08th December 2023, the Nifty closed 68 points higher while the Sensex closed 304 points higher in response to the recent positive data flows from India and the US. Of course, the Nifty did struggle around the 21,000 mark, but that is more due to the strong 1,200 point rally in the Nifty. In the last few days, Nifty has been volatile but has managed to breach above the 20,000 mark, and also the 20,500 levels. The rather tepid performance of the stock is quite surprising on listing day because not only were the overall sentiments in the market strong, but even the subscription levels of the company were quite strong in the IPO at more than 511X.

Subscription levels, and how it impacted listing of Net Avenue Technologies IPO

Let us now turn to the subscription story of Net Avenue Technologies Ltd. With impressive subscription of 721.89X for the retail portion, 61.99X for the QIB portion, and 616.25X for the HNI / NII portion; the overall subscription was extremely healthy at 511.21X. The IPO was a book built IPO issue with the IPO price brand in the range of ₹16 to ₹18 per share. Thanks to the robust response to the IPO, the stock price for the IPO got discovered at the upper band of ₹18 per share. The stock listed absolutely strong on the NSE at a premium of 133.33%. However, subsequently, despite the stock opening strong in a strong market and supported by robust subscription numbers, the stock went on to close at the lower circuit of -5% on the listing price.

This was reflective of pressure on the stock at higher levels, on a day when overall market sentiments were relatively quite strong. The subscription normally impacts the price discovery in book building issues and the listing price. The strong subscription has a positive impact on the ability of the stock  in two ways. Firstly, it led to the stock price getting discovered at the upper end of the band at ₹18 per share and that was seen in this case. However, on the day of listing, the stock managed to open 133.33% above the IPO issue price, but it went on to close the day at the -5% lower circuit on the listing price at the close of the day.

Stock closes Day-1 at lower circuit, after a very robust and strong  opening

Here is the pre-open price discovery for the Net Avenue Technologies IPO on the NSE.

Data Source: NSE

The SME IPO of Net Avenue Technologies Ltd was priced at ₹18 per share, being the upper end of the book building price band. On 08th December 2023, the stock of Net Avenue Technologies Ltd listed on the NSE at a robust premium price of ₹42.00 per share, which is a premium of 133.33% over the IPO issue price of ₹18 per share. However, despite a volatile day post listing on 08th December 2023, the stock of Net Avenue Technologies Ltd closed exactly at the lower circuit price of ₹39.90 per share. The stock had an upper circuit limit of ₹44.10 for the day and a lower circuit limit of ₹39.90 for the day. In the midst of the volatility in trading during the day, the stock never got above the listing price on the day, leave alone getting close to the upper circuit. However, the stock eventually closed the day exactly at the lower circuit price. The closing price reflects a mixed day of trading, because it closed at the lower circuit after a very strong opening for the day. However, this lower circuit comes after a very strong opening at 133.33% premium on a day when the Nifty and the Sensex recorded very strong gains of 68 points and 304 points respectively.

Being an SME IPO on the NSE, the stock of Net Avenue Technologies Ltd was subjected to 5% circuit filter on listing day and was also in the ST (trade to trade) segment. That means, only delivery trades are permitted on the stock. Like the upper circuit price, even the lower circuit price on listing day is calculated on the listing price and not on the IPO price. The opening price of the day was at a huge premium to the issue price. During the day, the stock made attempts to go above the listing price but stayed well below the listing price before closing the day exactly at the lower circuit price. On the NSE, the stock of Net Avenue Technologies Ltd has been admitted to trade in the ST category. The ST category is specifically for the SME Emerge segment of the NSE with compulsory trade to trade settlement. On such stocks, netting of positions is not permitted and every trade has to be settled by delivery only.

How prices traversed for Net Avenue Technologies IPO on listing day

On Day-1 of listing i.e., on 08th December 2023, Net Avenue Technologies Ltd touched a high of ₹42.00 per share on the NSE and a low of ₹39.90 per share. The high price of the day was the opening price of the day and was well below the upper circuit filter limit price of ₹44.10 per share. However,  the stock closed at the lower circuit price of ₹39.90 per share. Between these two extreme prices, the stock was relatively volatile but spent better part of the trading locked at the lower circuit only. In fact, the stock can be said to have enjoyed a very strong listing and weak close, despite very strong performance by the Nifty and Sensex. For the best part of the day, the stock stayed above the IPO issue price and also the IPO listing price. Despite the lower circuit, the stock still closed the day at a premium of 121.67% over the IPO issue price of ₹18 per share. It closed the day exactly at the 5% lower circuit.

In terms of the circuit filter limits, the stock of Net Avenue Technologies Ltd had an upper circuit filter limit of ₹44.10 and a lower circuit band limit of ₹39.90. The stock closed the day 121.67% above the IPO issue price of ₹18 per share but it also closed -5% below the listing price of the day at ₹42 per share. During the day, the stock of Net Avenue Technologies Ltd never crossed the IPO listing price, leave alone get close to the upper circuit for the day. However, the stock touched the lower circuit price of the day before actually closing locked at lower circuit at close for the day. In fact, the stock did spend better part of the trading day locked in lower circuit. The stock closed under pressure at the lower circuit at the close of the day with outstanding sell quantity of shares and no buyers in the counter. For the SME IPOs, it may be recollected, that 5% is the upper limit and also the lower circuit on the listing price on the day of listing.

Moderate to robust volumes for Net Avenue Technologies IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Net Avenue Technologies Ltd stock traded a total of 22.40 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹923.33 lakhs on the first day. The order book during the day showed a lot of volatility with the sell orders consistently exceeding the buy orders at any point of time post the rather strong listing. That also led the stock to close at the lower circuit of the day with pending sell orders at the end of the trading session, although the price was volatile during the day. It must be noted here that Net Avenue Technologies 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.

At the close of Day-1 of listing, Net Avenue Technologies Ltd had a market capitalization of ₹85.60 crore with free-float market cap of ₹57.11 crore. It has a total of 214.54 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 22.40 lakh shares during the day is accounted by delivery trades only, barring some market trade exceptions in the market. The stock traded on the NSE under the code “CBAZAAR” and its ISIN code was “INE518X01015”.