LK Mehta Polymers IPO Listing: Stock lists flat on BSE SME

LK Mehta Polymers IPO Listing

LK Mehta Polymers IPO Listing: A ‘Super Pack’ Entry That Fell Short, Flat Start Leads to a Shocking Decline

The much-anticipated IPO of LK Mehta Polymers, which raised ₹7.38 crore, made its debut on the BSE SME platform today.

However, the listing did not live up to the high expectations set by its strong subscription numbers, leading to a disappointing market debut.

Despite the enthusiastic investor response, especially from the retail segment, the company’s shares experienced a flat entry, followed by an unexpected fall to the lower circuit limit.

This left investors in a state of shock, as the stock performance sharply deviated from the optimism that accompanied the IPO.

The IPO’s Performance

LK Mehta Polymers’ IPO was open for subscription from February 13 to 17, 2025, and the shares were offered at ₹71 each.

Despite the company’s modest size and a relatively small issue size of ₹7.38 crore, the IPO received an overwhelming response from investors.

The issue was oversubscribed by 44.57 times, which reflected strong interest, particularly from retail investors.

The portion of the IPO reserved for retail investors was filled 46.25 times, showcasing the significant retail participation in the offering.

The total issue consisted of 10.4 lakh new shares, each with a face value of ₹10. The funds raised from this IPO were earmarked to support the company’s working capital needs and for general corporate purposes.

However, when the shares finally made their market debut on the BSE SME, they listed at ₹71.10, which represented an extremely modest listing gain of just 0.14% from the issue price of ₹71.

Given the massive oversubscription and the general expectation that the shares would perform well on listing, this lukewarm entry left many investors disappointed.

A listing gain of only 0.14% was far below the expectations set by the initial excitement, which had anticipated a much stronger debut.

What followed was even more surprising. Shortly after listing, the stock price began to fall sharply, and within a few hours, it hit the lower circuit limit of ₹67.54.

This represents a 4.87% drop from the listing price, resulting in a loss for investors who had bought into the IPO at ₹71.

The fall to the lower circuit limit indicated that there was not just a lack of positive momentum but also significant investor caution, which was compounded by the lack of strong buying interest after the listing.

The Strong IPO Response

Despite the disappointing market debut, it is essential to note the strong response that LK Mehta Polymers’ IPO received during the subscription period.

The high subscription figures indicate that there was genuine investor interest in the company and its prospects.

The IPO’s massive oversubscription, particularly in the retail category, suggests that many investors believed the company’s offerings held promise.

The IPO’s subscription figures highlighted the demand for the stock. It was subscribed 44.57 times in total, with the retail segment witnessing an oversubscription of 46.25 times.

This was a clear indication that the company’s product offerings and growth story appealed to a wide base of investors, particularly the retail investors.

However, this strong demand did not translate into the expected post-listing performance, as market conditions and investor sentiment seemed to shift quickly after the listing.

While the IPO subscription numbers are undoubtedly impressive, they also bring into question the volatility and unpredictability associated with SME stocks.

Despite the fact that the issue was oversubscribed multiple times, the company’s market debut failed to capitalize on the initial investor enthusiasm, leaving many questioning the market’s ability to gauge the true value of such stocks at the time of listing.

LK Mehta Polymers: Financials and Business Overview

Founded in 1995, LK Mehta Polymers manufactures and sells plastic products such as ropes and twine under the brand name ‘Super Pack’.

The company has built a reputation for its products in a competitive market, and the IPO was seen as a way for the company to raise funds to further expand and strengthen its operations.

Looking at the financial health of the company, LK Mehta Polymers has experienced both growth and setbacks in recent years.

In FY 2022, the company posted a modest net profit of ₹4 lakh. However, in FY 2023, the company encountered a slight dip, posting a loss of ₹1 lakh.

The turning point came in FY 2024, when the company managed a substantial turnaround, with its profit jumping to ₹86 lakh.

The turnaround was largely driven by a significant increase in the company’s revenue, which had grown at a compound annual growth rate (CAGR) of more than 25% year-over-year, reaching ₹18.87 crore in FY 2024.

In the current financial year, the company is on a positive trajectory, reporting a net profit of ₹42 lakh and revenue of ₹11.98 crore for the period from April to December 2024.

These strong financials were one of the key reasons behind the high demand for the IPO, as investors saw a company with growing revenues and profits.

This performance suggested that LK Mehta Polymers was in a strong position to continue its growth and expand its product offerings in the years to come.

Despite the promising financials, the company’s relatively small size and market presence may have contributed to the volatility in its stock post-listing.

Investors in smaller companies like LK Mehta Polymers are often cautious due to the greater risk involved in their market performance, especially when it comes to the lack of visibility in the broader market.

Market Volatility and the SME Sector

The underwhelming debut of LK Mehta Polymers highlights the volatility inherent in SME stocks.

While these stocks often attract attention due to their growth potential and low market capitalization, they are also subject to greater price fluctuations once listed on the stock exchanges.

The price action observed in LK Mehta Polymers’ stock is a reminder that the IPO market, particularly in the SME sector, can be unpredictable.

Retail investors, who were enthusiastic about the IPO, have found themselves grappling with a stock that is now trading below its issue price.

This points to the broader risks associated with investing in smaller companies, particularly those with limited liquidity and exposure to market sentiment swings.

While LK Mehta Polymers’ strong financial performance in recent years might justify the optimism surrounding its IPO, the post-listing price decline demonstrates that the market can often behave unpredictably in the short term.

Final Remarks

In conclusion, while LK Mehta Polymers’ IPO garnered significant investor interest, the company’s listing has been disappointing for investors.

Despite the overwhelming subscription figures and the company’s strong financial performance, the stock has failed to live up to the “Super Pack” expectations.

The modest listing gain followed by a sharp drop to the lower circuit highlights the challenges of investing in smaller, lesser-known companies, particularly in the volatile SME segment.

Looking ahead, LK Mehta Polymers’ future performance will depend on its ability to navigate the challenges of the market, sustain its growth trajectory, and regain investor confidence.

For investors, this debut serves as a reminder of the risks involved in investing in the SME segment, where market sentiment can fluctuate rapidly, leaving even the most optimistic investors with unexpected outcomes.