Identical Brains Studios IPO Listing: Stock lists at 76% premium on NSE SME

Identical Brains Studios IPO Listing

Identical Brains Studios IPO Listing: A Strong Debut Followed by Volatility, Closing with Impressive Gains

The debut listing of Identical Brains Studios on the NSE SME platform has generated considerable buzz, reflecting the growing investor interest in the Visual Effects (VFX) and post-production industry.

The company, known for its VFX contributions to blockbuster productions like Scam 1992: The Harshad Mehta Story and Rocket Boys, opened its IPO to the public in December 2023.

With an exceptional response during the subscription phase, the shares initially soared after listing but later encountered volatility due to profit-booking activities.

Despite this, the company’s stock ended the day with significant gains, showcasing the resilience of the business in the face of market fluctuations.

IPO Details: Subscription and Listing

The Identical Brains Studios IPO offered 36.94 lakh new equity shares with a face value of ₹10 each, raising a total of ₹19.95 crore.

The offer was open for subscription from 18th to 20th December 2023 and received an overwhelming response from investors.

The IPO was subscribed a staggering 544.28 times, with the Qualified Institutional Buyers (QIB) portion oversubscribed by 187.36 times, the Non-Institutional Investors (NII) portion oversubscribed by 1,020.2 times, and the retail investors portion subscribed 544.28 times.

This high demand underscored investor confidence in Identical Brains Studios’ potential, especially given its impressive track record in the VFX industry.

The company priced its shares at ₹54 under the IPO, and upon listing today, the shares opened at ₹95 on the NSE SME platform, marking a 75.93% premium over the issue price.

Volatility and Profit Booking

However, the initial excitement surrounding the strong opening quickly faced some challenges. After the shares surged to ₹95 in early trading, profit booking activities began to dominate the market.

Investors who had subscribed at the issue price of ₹54 looked to lock in gains, causing the stock price to fall.

The stock’s price dropped to ₹90.25, triggering the lower circuit limit, which is the maximum permissible drop in a stock’s price on any given trading day.

This sharp decline caused a brief period of concern among investors, as many feared the stock might continue to struggle throughout the trading day.

Yet, in a remarkable turnaround, the share price rebounded strongly. By the market close, the stock reached the upper circuit limit of ₹99.75, ending the day at that level.

This recovery allowed the IPO investors to gain an impressive 85% return on their investment on the very first day of listing.

IPO Response: An Overwhelming Subscription

The IPO of Identical Brains Studios was one of the most anticipated in recent months, and its overwhelming subscription numbers clearly reflect the market’s enthusiasm.

The subscription was a testimony to the strong belief investors have in the company’s future growth prospects. Let’s take a deeper look at the IPO’s subscription breakdown:

• Qualified Institutional Buyers (QIBs): Subscribed 187.36 times, showing that institutional investors, including mutual funds and foreign investors, found the company’s growth trajectory promising.
• Non-Institutional Investors (NIIs): Subscribed 1,020.2 times, a remarkable figure, indicating that high-net-worth individuals (HNIs) had significant faith in the potential of the business.
• Retail Investors: Subscribed 544.28 times, which indicates strong retail investor participation, a sign that the company has earned recognition among individual investors.

This broad-based subscription is significant for a company in the SME (small and medium enterprises) sector, underscoring the growing interest in businesses that serve niche but expanding industries like VFX.

Use of IPO Proceeds

The funds raised from the ₹19.95 crore IPO will be used for various expansion and development activities within the company.

A portion of the funds will be allocated to the renovation of Identical Brains Studios’ existing office and studio located in Andheri, Mumbai.

Additionally, the company plans to set up a color grading, digital intermediate, and sound studio in a new branch office in Andheri to meet the growing demand for VFX services in the entertainment sector.

Identical Brains Studios also intends to use the funds to open a new branch office in Lucknow, a strategic move that will allow the company to tap into a different market and diversify its client base.

Other key areas of investment include purchasing advanced computers, storage systems, and software to bolster its technological infrastructure and meet increasing working capital requirements.

The company’s strategic expansion plan positions it well to scale operations and meet the rising demand for VFX services in India and abroad, particularly given the booming growth of the digital entertainment industry.

Financial Health and Performance

Identical Brains Studios, founded in 2019, has demonstrated rapid growth in its short operational history.

Specializing in VFX services for films, web series, TV shows, documentaries, and commercials, the company has established itself as a key player in the VFX space. The company’s financial performance reflects a consistent upward trajectory.

• FY 2022: The company posted a net profit of ₹51.01 lakh.
• FY 2023: The net profit surged to ₹1.61 crore, representing a strong year-on-year growth.
• FY 2024: The company’s net profit reached ₹5.35 crore, a significant leap, and its revenue grew at a CAGR of 127%, hitting ₹20.26 crore for the fiscal year.

Looking at the first half of FY 2024-25 (April to September 2024), Identical Brains Studios has continued to maintain momentum, posting a net profit of ₹2.41 crore and revenue of ₹11.50 crore, putting it on track for another solid year of growth.

The rapid revenue expansion coupled with improving profitability highlights the company’s effective operational strategy and its ability to scale in line with market demand.

Final Remarks: A Promising Future for Identical Brains Studios

The Identical Brains Studios IPO has marked a significant milestone for the company, and its debut performance on the NSE SME platform demonstrates investor confidence in the business’s growth prospects.

Although the stock experienced some short-term volatility after the initial surge, the recovery by day’s end suggests that the company has solid long-term potential.

With the IPO funds earmarked for expansion, infrastructure upgrades, and enhanced technological capabilities, Identical Brains Studios is well-positioned to capitalize on the growing demand for VFX services in India and globally.

Its impressive track record of financial growth and market acceptance makes it a company to watch in the coming years.

For IPO investors, the 85% return on the first day of trading is a promising sign, and the company’s continued focus on innovation and expansion should provide ample opportunities for future growth.

Identical Brains Studios is poised to become a key player in the entertainment industry’s evolving landscape, making its IPO debut an exciting entry for investors.