Beezaasan Explotech IPO Listing: Stock lists at 17% discount on BSE SME
Beezaasan Explotech IPO Listing
Beezaasan Explotech IPO Listing: Shares Open at 16% Discount, Leaving IPO Investors with Losses Despite Upper Circuit
The much-anticipated IPO of Beezaasan Explotech, a company specializing in manufacturing explosives for industries such as cement, mining, and defense, has seen a rocky start after being listed on the BSE SME platform.
The company’s ₹59.93 crore IPO, which was open for subscription from February 21 to February 25, made its debut today at a significant 16% discount to the issue price.
Despite receiving strong subscription demand, the stock’s poor listing performance has left IPO investors in a difficult position, suffering losses despite a subsequent recovery to the upper circuit limit.
Beezaasan Explotech issued its shares at ₹175 during the IPO, but upon listing, the shares debuted at ₹146 on the BSE SME platform.
This marked a sharp 16.57% drop from the issue price, immediately putting IPO investors at a disadvantage.
While the stock saw some recovery throughout the trading session, reaching the upper circuit limit at ₹153.30, the final closing price was still lower than the issue price, leaving investors with a 12.40% loss.
This poor listing performance, especially considering the higher-than-expected subscription, has raised concerns about the company’s valuation and the timing of the IPO.
Beezaasan Explotech IPO Subscription and Demand
The Beezaasan Explotech IPO was met with strong demand across different investor categories. The issue was oversubscribed by a solid 5.43 times overall, a sign that institutional and retail investors were interested in the company’s prospects.
The portion reserved for Qualified Institutional Buyers (QIBs) was particularly well-received, being oversubscribed by a remarkable 11.52 times.
Non-Institutional Investors (NIIs) also showed strong interest, with their portion being filled 4.65 times. Retail investors, on the other hand, subscribed 2.26 times, indicating decent demand, albeit less than the institutional investors.
Despite the strong demand and high subscription rates, the stock’s listing performance fell short of expectations.
The disconnect between the IPO’s subscription numbers and its market debut could point to various factors, including market sentiment, broader economic conditions, and the pricing strategy of the company.
In a period of heightened volatility in the stock markets, it is not uncommon for IPOs to underperform on listing, as investors may remain cautious about making large bets on new listings, especially in sectors subject to cyclical or external pressures like mining and defense.
IPO Issue Details and Fund Utilization
The funds raised through the Beezaasan Explotech IPO, amounting to ₹59.93 crore, will be used for a variety of strategic initiatives aimed at strengthening the company’s business operations and long-term growth. Specifically, the company has outlined several key areas for the allocation of these funds:
- Purchase of Plant and Machinery: Beezaasan Explotech plans to invest in upgrading and expanding its production capabilities by purchasing additional plant and machinery. This move aims to boost production capacity, enabling the company to meet growing demand across its core industries—cement, mining, and defense.
- Capital Expenditure for Civil Construction: A portion of the funds will be allocated to civil construction, which could involve expanding its existing facilities or developing new infrastructure to accommodate future growth.
- Purchase of Commercial Vehicles: The company also plans to invest in purchasing commercial vehicles to strengthen its logistics capabilities. As an explosives manufacturer, efficient transportation of materials is critical, and this move would likely streamline operations and reduce costs.
- Repayment of Debt: A portion of the IPO proceeds will be used to pay down existing debts, improving the company’s financial health and potentially lowering interest costs. Reducing the debt burden could also enhance the company’s overall financial stability.
- General Corporate Purposes: Finally, the company has earmarked some of the funds for general corporate purposes, which could include working capital requirements and other business development activities.
About Beezaasan Explotech
Beezaasan Explotech, founded in August 2013, specializes in manufacturing explosives and related accessories, with a primary focus on cartridge explosives such as slurry, emulsion, and detonating explosives.
These products are primarily used in the cement, mining, and defense industries, making Beezaasan Explotech an important player in sectors critical to infrastructure and national security.
The company’s manufacturing facility is located in Gujarat, where it produces these explosives in compliance with stringent safety and regulatory standards.
With the growth of the mining and cement industries, as well as increasing demand from the defense sector, Beezaasan Explotech stands to benefit from long-term growth opportunities.
Financially, the company has experienced steady growth over the past few years. In FY 2022, Beezaasan Explotech reported a net profit of ₹2.74 crore, which rose to ₹2.94 crore in FY 2023, and ₹4.87 crore in FY 2024.
While the company has seen consistent growth in profitability, its revenue has been more volatile. It earned ₹141.91 crore in FY 2022, ₹229.17 crore in FY 2023, and ₹187.9 crore in FY 2024.
This fluctuation in revenue could be attributed to the cyclical nature of the industries the company serves, which can be affected by macroeconomic factors such as commodity prices, government policies, and infrastructure development trends.
For the first half of the ongoing financial year 2024-25 (April-September), Beezaasan Explotech has posted strong financial performance, with a net profit of ₹8.33 crore and revenue of ₹101.44 crore.
These figures suggest that the company is on track for another year of profitability, despite the challenges faced by its key sectors.
Factors Behind the Poor Listing Performance
Several factors could have contributed to the poor listing performance of Beezaasan Explotech’s IPO. First, market sentiment plays a significant role in IPO outcomes.
With ongoing volatility in global markets, particularly due to concerns about inflation, interest rates, and geopolitical tensions, investors may have adopted a more cautious stance, leading to a less-than-optimal debut for the stock.
Second, while Beezaasan Explotech has shown consistent profitability, its revenue volatility could raise concerns among investors about the stability of its earnings.
As the company operates in industries that are influenced by external factors such as commodity prices, environmental regulations, and defense spending, investors may have been wary of its ability to maintain growth over the long term.
Finally, the pricing of the IPO may have been a factor in its weak listing performance. At ₹175 per share, the IPO was priced in a way that may have been viewed as too aggressive by the market, given the company’s financials and the broader market conditions.
Final Remarks
The Beezaasan Explotech IPO has had a rocky debut, with the stock opening at a significant discount and failing to deliver the expected listing gains for investors.
Despite receiving strong demand during the subscription period, the poor performance on listing day underscores the challenges IPOs face in a volatile market.
Although the company’s financials show steady growth and its strategic use of IPO funds could strengthen its operations, the initial response from the stock market reflects investor caution.
As a result, it remains to be seen whether Beezaasan Explotech can recover in the longer term, and whether it can provide returns for investors who remain committed to the stock post-listing.
