Owais Metal & Mineral Processing IPO Soars 187.36% on Listing, Hits Upper Circuit

Bumper listing for Owais Metal and Mineral Processing IPO, then upper circuit

Owais Metal and Mineral Processing IPO had a real strong listing on 04th March 2024, listing at a premium of 187.36%. After a strong  opening, the stock closed the day at the 5% upper circuit over the listing price. For the day, the stock closed comfortably above the IPO issue price and the IPO listing price at the close of trading on 04th March 2024. What also stood out about the stock was the robustly strong listing even in the absence of market support. In fact, on the day, the Nifty had shown minor gains of 27 point and the Sensex was up by 66 points. In the last few days, the Nifty has been volatile but has managed to hold the 22,300 mark during the week and that is what matters to the market.  However, markets did show some signs of weakness, or rather tiring out at higher levels, today as traders rushed to book profits during a truncated week in the markets. Also, there is some exhaustion in the market after a very sharp rally in the last few months.

Subscription and price performance of Owais Metal and Mineral Processing IPO on listing day

Let us now turn to the subscription story of Owais Metal and Mineral Processing Ltd. With robust subscription of 248.50X for the retail portion, 92.06X for the QIB portion, and 329.36X for the HNI / NII portion; the overall subscription was very strong at 221.18X. The IPO was a book building IPO issue with the IPO price band of between ₹83 to ₹87 per share. Being a book building issue, and backed by robust subscriptions, the IPO price got discovered at the upper end of the band. The stock listed at a strong premium of 187.36% on the NSE SME segment.

However, subsequently, despite the stock seeing some volatility in the early parts of the day, it went on to close at the upper circuit of 5% over the listing price. This was reflective of strength in the stock amidst the volatile market sentiments. The subscription normally impacts the price discovery in book built issues and the listing price. The strong subscription had a positive impact on the ability of the stock  in 3 ways. Firstly, the strong subscription ensured that the stock IPO price got discovered at the upper end of the price band. Secondly, it led to the stock price listing at a very strong premium to the issue price. Thirdly, despite the volatility seen in the overall market, the stock managed to close at the 5% upper circuit for the day, which is a sign of inherent strength in the stock.

Stock closes Day-1 at upper circuit, after a bumper listing start

Here is the pre-open price discovery for the Owais Metal and Mineral Processing IPO on the NSE.

Data Source: NSE

The SME IPO of Owais Metal and Mineral Processing Ltd was a book built IPO and priced at the upper band of ₹87 per share. On 04th March 2024, the stock of Owais Metal and Mineral Processing Ltd listed on the NSE at a price of ₹250 per share, a premium of 187.36% over the IPO issue price of ₹87. However, despite a volatile day post listing on 04th March 2024, the stock of Owais Metal and Mineral Processing Ltd closed exactly at the upper circuit price of ₹262.50 per share on the NSE SME segment. The stock had an upper circuit limit of ₹262.50 for the day and a lower circuit limit of ₹237.50 per share for the day. In the midst of the volatility in trading during the day, the stock hit the upper circuit and tried to hit the lower circuit of the day. However, later in the day, it recovered sharply and closed at the upper circuit price of the day.

Due to the volatility in the stock price, the stock on listing day went below the listing price of the day, and even briefly got close to the lower circuit, which was also the low price of the day at ₹241 per share. The stock showed a smart bounce from near the lower circuit levels as it spent better part of the second half of the trading session locked in upper circuit. The closing price reflects a strong day of trading, because it closed at the upper circuit despite getting close to the lower circuit price of the day. Also, the upper circuit comes on top of an 187.36% premium listing of the stock, which is all the more appreciable, considering that the Nifty and the Sensex had been relatively tepid on the day of listing of Owais Metal and Mineral Processing Ltd. The Nifty just gained 27 points while Sensex gained 66 points on the day. Overall, the closing price of the stock of Owais Metal and Mineral Processing Ltd was a full 201.72% above the issue price at the close of the first day of the stock listing on the NSE SME segment. This can be called a commendable performance, especially considering that the stock had shown signs of jitteriness in the morning due to which the stock even touched the lower circuit in the early part of the day.

Listed in the ST segment for trade in T2T

Being an SME IPO on the NSE, the stock of Owais Metal and Mineral Processing 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 low price of the day was exactly at the lower circuit price of the day, while the high price of the day was the upper circuit price of the day. Eventually, the stock closed the day at the upper circuit price of the day.

During the day, the stock hit the upper circuit but only after it had briefly spent time at the lower circuit of the day. In fact, the stock went sharply below the listing price and did get close to the low price of the day, before bouncing back and closing at the upper circuit of the day. On the NSE, the stock of Owais Metal and Mineral Processing 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 Owais Metal and Mineral Processing IPO on listing day

On Day-1 of listing i.e., on 04th March 2024, Owais Metal and Mineral Processing Ltd touched a high of ₹262.50 per share on the NSE and a low of ₹241.00 per share. The high price of the day was exactly the upper circuit limit price of the stock while the stock low price of the day was above the lower circuit of the day. Between these two extreme prices, the stock was fairly volatile and eventually closed at the upper circuit price of the day. In fact, the stock can be said to have enjoyed a strong listing and despite the Nifty and Sensex closing with limited gains on Monday.

During the trading day, the stock opened strong but tried to get close to the lower circuit price. However, it recovered to bounce back to close at the upper circuit. In terms of the circuit filter limits, the stock of Owais Metal and Mineral Processing Ltd had an upper circuit filter limit of ₹262.50 and a lower circuit band limit of ₹237.50. The stock closed the day 201.72% above the IPO issue price of ₹87 per share and it also closed 5% above the listing price of the day at ₹250 per share. During the day, the stock of Owais Metal and Mineral Processing Ltd hit the upper circuit and stayed locked in the upper circuit for most part of the day. However, it had first dipped close to lower circuit price, before bouncing back. The stock closed at the upper circuit with unmet buy quantity of 62,400 shares and no sellers. For the SME IPOs, 5% is the upper limit and also the lower circuit on the listing price.

Robust volumes for Owais Metal and Mineral Processing IPO on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Owais Metal and Mineral Processing Ltd stock traded a total of 25.44 lakh shares on NSE SME segment amounting to trading value (turnover) of ₹6,430.47 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 in the second half, although the sellers were visible in the first half of the trading session. That also led the stock to close with pending buy orders of 62,400 shares (unmet) at the end of the trading session, although the price was volatile in the day. It must be noted here that Owais Metal and Mineral Processing 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, Owais Metal and Mineral Processing Ltd had a market capitalization of ₹477.29 crore with free-float market cap of ₹128.82 crore. It has a total of 181.82 lakh shares as the issued capital of the company with a face value of ₹10 per share. As stated earlier, since the trading is on the T2T segment, the entire volume of 25.44 lakh shares during the day is accounted by delivery trades only, barring some market trade exceptions in the market. The stock trades on the NSE SME segment under the trading code (OWAIS) and will be available in the demat account under ISIN code (INE0R8M01017).

IPO size to Market cap contribution ratio

One way to assess the significance of the IPO on the market cap of the segment is the ratio of market overall to the IPO size. Owais Metal and Mineral Processing Ltd had a market cap of ₹477.29 crore and the issue size was ₹42.69 crore. Therefore, the Market cap contribution ratio of the IPO works out to 11.18 times; which is at sharply above the median. Remember, this is not the ratio of the market cap to original book value, but the ratio of the market cap created to the size of the IPO. That shows the significance of the IPO to the overall market cap accretion of the stock exchange.