Malpani Pipes IPO Listing: Stock lists at 4.56% discount on BSE SME

Malpani Pipes IPO Listing

Malpani Pipes IPO Listing: ₹ 90 Share Faces Major Setback, Opens at a 4% Discount, Hits Lower Circuit

Malpani Pipes & Fittings, a relatively new player in the plastic pipes manufacturing industry, made a highly anticipated debut on the Indian stock market today.

However, what was expected to be a lucrative entry for investors quickly turned into a disappointing scenario.

The company’s ₹ 25.92 crore Initial Public Offering (IPO) opened for subscription from January 29 to 31 and received an overwhelming response from the market.

Despite this initial optimism, the share price opened at a 4% discount to the issue price and then fell further, hitting a lower circuit limit before making a brief recovery.

Malpani Pipes IPO Performance: Weak Listing and Immediate Losses for Investors

Malpani Pipes & Fittings, which manufactures high-grade plastic pipes under the Volstar brand, launched its IPO to raise capital for business expansion and debt reduction.

The IPO was priced at ₹ 90 per share. However, when the shares began trading today, they opened at ₹ 85.90 on the BSE SME platform, marking a 4.56% drop from the issue price.

The initial loss for IPO investors was compounded as the share price further declined during the trading day.

The stock continued to face selling pressure and eventually hit a lower circuit limit of ₹ 81.61, meaning it could not be traded further on the downside without a price reset.

For many investors, this was an alarming development, as a lower circuit indicates extreme market volatility and is usually seen when investors lose confidence in the stock.

While there was a brief recovery with the share price touching ₹ 90 for a short period, the optimism was short-lived.

The stock once again slid, and by the end of the first trading session, Malpani Pipes shares closed at ₹ 84.25.

This marked a significant loss of 6.39% for those who had bought into the IPO, leaving many investors grappling with the immediate financial consequences of a weak market debut.

The Subscription Frenzy: A Contradiction to Weak Listing

Despite the poor listing performance, the IPO had received an exceptional response during the subscription period.

The issue was subscribed a staggering 146.93 times in total. This indicates that investor interest in Malpani Pipes was very high, with many hoping for long-term growth potential from the company.

However, the enthusiasm did not translate into immediate listing gains.

A closer look at the subscription details reveals that the Qualified Institutional Buyers (QIB) portion of the IPO was subscribed 58.49 times, which indicates strong institutional interest.

The Non-Institutional Investor (NII) portion saw an even higher subscription rate of 343.13 times, suggesting that high-net-worth individuals were particularly bullish on the stock.

The Retail Investor portion, too, was heavily oversubscribed, with a subscription rate of 113.35 times. This strong demand suggests that the company’s fundamentals were generally well-regarded by investors, but the weak listing performance may have been driven by broader market sentiment or short-term profit-taking behavior among traders.

The 146.93 times oversubscription indicates strong investor confidence in the company’s growth trajectory. However, the stock’s post-listing decline has raised concerns about how market sentiments can change quickly.

While the IPO might have been considered successful in terms of demand, the weak listing performance shows how unpredictable the stock market can be, especially for companies making their first appearance.

Malpani Pipes: A Growing Business with Strong Financials

Malpani Pipes & Fittings was founded in 2017 and has since positioned itself as a significant player in the manufacturing of high-quality plastic pipes under its Volstar brand.

The company produces a wide range of products used in various infrastructure projects, including irrigation, water supply, sewerage systems, drainage, tube wells, and more.

Additionally, its pipes are also used for electric cable and optical fiber installations. With a manufacturing plant based in Ratlaman, Madhya Pradesh, the company’s pipes are increasingly being used for large-scale infrastructure projects across India.

Financially, Malpani Pipes has shown consistent growth since its inception. In FY 2022, the company reported a net profit of ₹ 89 lakh.

This figure grew to ₹ 2.08 crore in FY 2023 and further surged to ₹ 7.4 crore in FY 2024. The company’s revenue has grown at an impressive compound annual growth rate (CAGR) of 101% over the past few years, reaching ₹ 141.16 crore for FY 2024.

Moreover, in the current financial year (2024-25), Malpani Pipes has already achieved a net profit of ₹ 5.09 crore, with a revenue of ₹ 84.55 crore for the period of April-November 2024.

This strong financial performance highlights the company’s potential for future growth, especially given the robust demand for infrastructure products in India.

Malpani Pipes has also demonstrated a successful strategy in expanding its manufacturing capacity, with plans for future investments aimed at strengthening its market position.

IPO Proceeds and Utilization Plans

The funds raised through the IPO are intended to support various strategic initiatives. The company plans to use the capital for the purchase of additional machinery, which would enhance its manufacturing capabilities.

The funds will also be utilized for the repayment of existing debt, helping the company reduce its financial leverage and improve its balance sheet.

Additionally, some of the proceeds will be directed towards general corporate purposes, allowing the company to explore new business opportunities and further expand its operations.

Looking Ahead: Will Malpani Pipes Overcome Initial Challenges?

The first day of trading for Malpani Pipes & Fittings was disappointing, but it’s important to consider the broader picture.

The company has shown impressive financial growth over recent years, with a clear focus on expanding its product portfolio and improving its infrastructure capabilities.

While the weak listing may have been a setback for IPO investors, it does not necessarily reflect the long-term potential of the company.

Investors may need to exercise patience, as the market often takes time to fully appreciate the value of emerging companies.

With infrastructure development continuing to be a key focus of the Indian government, Malpani Pipes is well-positioned to benefit from long-term growth in this sector.

However, investors should remain cautious and monitor the stock’s performance over the next few weeks to determine if it can regain investor confidence and deliver on its promises.

In conclusion, while Malpani Pipes’ IPO had a rocky start, the company’s strong fundamentals and growth prospects could potentially turn the situation around in the long run.

Those who have invested in the IPO may have to wait for the market to recognize the company’s true potential before they see significant returns on their investment.