Sungarner Energies IPO lists at 201% premium, rallies higher

Sungarner Energies Ltd has bumper NSE SME listing

Sungarner Energies Ltd had a virtual bumper listing on 31st August 2023, listing at a humongous premium of 201%, and subsequently adding further heft and closing at the 5% upper circuit over the listing price. The stock not only closed above the IPO issue price, but also above the IPO listing price for the day. This type of sterling performance came on a day when the markets came under pressure as the Nifty closed with a loss of 94 points ahead of the GDP data announcement expected on 31st August 2023. It was more about uncertainty related profit booking as traders chose to stay light ahead of major data announcements like the core sector output, the GDP output, the US PCE inflation etc. However, despite such a weak day of trading, the listing of the stock was at a handsome premium of 201% and even managed to strike the 5% upper circuit after the stellar listing.

The stock of Sungarner Energies Ltd did show some early strength on opening and tried to hold higher. While there was some resistance at the upper circuit price, the fall was just marginal and the stock closed very close to the 5% upper circuit on the stock. The stock closed above the IPO issue price and also well above the listing price to close at 5% upper circuit on the listing price of the stock. Being an NSE SME IPO, it is only traded on the SME segment of NSE and the circuit filters are frozen at 5% move either ways. Sungarner Energies Ltd opened 201% higher and the opening price turned out to be a strong support through most of the day, despite the volatility in the markets. With subscription of 192.93X for the retail portion and 110.59X for the HNI / NII portion; the overall subscription was extremely strong and robust at 152.40X. The very strong subscription numbers meant that although the stock showed substantial strength on opening, and despite the weakness in the markets overall, the stock managed to close near to the upper circuit on the stock. Even the weak marketing sentiments did not deter the positive sentiments surrounding the stock.

Sungarner Energies closes Day-1 of listing at substantial premium

Here is the pre-open price discovery for the SME IPO of Sungarner Energies Ltd on the NSE.

Data Source: NSE

The SME IPO of Sungarner Energies Ltd was a fixed price IPO that was priced at ₹83 per share via the fixed IPO pricing format. On 31st August 2023, the stock of Sungarner Energies Ltd listed on the NSE at a price of ₹250, a premium of 201% on the IPO issue price of ₹83. Since it was not a book building issue, there was no question of price discovery in the IPO. However, the stock sentiments were so strong that it managed to sustain the weak market conditions and still close at a premium to the issue price and the listing price. For the day, the stock closed at a price of ₹262, which is 215.7% above the IPO issue price and 4.8% above the listing price of the stock on the first day of listing. In a nutshell, the stock of Sungarner Energies Ltd had closed the day very close to the upper circuit price for the stock of 5% with only buyers predominantly outnumbering the sellers on the counter. 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 stock traded above the opening price for most part of the day.

How prices traversed for Sungarner Energies Ltd on listing day

On Day-1 of listing i.e., on 31st August 2023, Sungarner Energies Ltd touched a high of ₹262.50 on the NSE and a low of ₹237.50 per share. The opening price of the day was exactly at the mid-point between the high price and the low price of the stock on the listing day, showing a lot of volatility in the stock on 31st August 2023. For the day, the stock closed near to the high point of the day, which also represents a little off the 5% upper circuit. The 5% circuit either ways, is the maximum that the SME IPO stock is allowed to move in the day of listing as it remains on T2T mode. What is truly appreciable is that the stock closed in the positive over the issue price, despite the markets being weak and the Nifty falling sharply during the day. The Nifty, it may be recollected had gotten close to the 20,000 levels but has subsequently come under pressure and has ceded ground to now close below the 19,400 mark. The stock closed near to the 5% upper circuit with selling pressure seen late in the day, although it did not disturb the bullishness in the stock in any way. For the SME IPOs, 5% is the upper limit and also the lower circuit on the listing price on the day of listing.

Robust volumes for Sungarner Energies Ltd on listing day

Let us now turn to the volumes of the stock on the NSE. On Day-1 of listing, the Sungarner Energies Ltd stock traded a total of 5.02 lakh shares on NSE SME segment amounting to value of ₹1,248.72 lakhs on the first day.  The order book during the day showed some bit of selling that caused volatility, but for most of the day, the buyer orders outnumbered the sell orders. That also led the stock to close at the lower end of the circuit filter. It must be noted here that Sungarner Energies 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, Sungarner Energies Ltd had a market capitalization of ₹60.75 crore with free-float market cap of ₹23.39 crore. It has a total of 23.19 lakh shares as the issued capital of the company. As stated earlier, since the trading is on the T2T segment, the entire volume of 5.02 lakh shares during the day is accounted for only by delivery trades.

Brief on the business model of Sungarner Energies Ltd

Sungarner Energies Ltd was incorporated in 2015. The company is engaged in the manufacture of Solar Inverters, Online UPS Systems, EV Chargers, and Lead Acid Batteries, which are some of the key inputs that go into the generation of solar energy and are also into solar and renewable energy related equipment. The company started off as a design engineering and solar EPC company and later diversified into higher end products. Today, the company makes power electronics and energy storage products also. Sungarner Energies Ltd also producers lead acid batteries of capacities ranging from 12 Volts 40 ampere-hours to 12 volts 300 ampere-hours.

Sungarner Energies Ltd has also obtained a WMI (world manufacturer identifier) code for the manufacturing of EV Vehicles. This product is currently only in the prototype stage and there is still time to full-scale manufacturing of EV Vehicles. The major clients of Sungarner Energies Ltd come from the states of Haryana, UP, and Rajasthan as well as Bihar and Assam. At present, the company is planning to expand its footprint through an additional 500 Franchisees that will cover all the major Districts of India by the end of 2025. Sungarner Energies Ltd has also started exports in the last 2 years and currently exports its specialized products to countries like Nigeria, Lebanon, Nepal, Dubai, and Bhutan.

Sungarner Energies Ltd was promoted by Sumit Tiwari and Snigdha Tiwari. The promoter holding in the company currently stands at 84.94%. However, post the IPO, the promoter equity will be diluted to 61.49%. The fresh issue will be used by the company for meeting its working capital funding gaps and for general corporate purposes. While Fast Track Finsec Private Ltd will be the lead manager to the issue, Skyline Financial Services Private Ltd will be the registrar to the issue. The market maker for the issue is Nikunj Stock Brokers Ltd.