Rexpro Enterprises IPO Listing: Stock lists at 19% discount on NSE SME

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Rexpro Enterprises IPO Listing

Rexpro Enterprises IPO Listing

Rexpro Enterprises IPO Listing: A Double Shock for Investors with Losses of ₹33,850 per Lot

Rexpro Enterprises, a leading manufacturer of office, hospital, and home furniture, launched its ₹53.65 crore initial public offering (IPO) from January 22 to January 24, 2025.

The IPO garnered significant attention from investors, especially retail investors, who showed strong enthusiasm for the company’s market debut.

However, the listing day turned out to be a harsh reality check for those who had subscribed to the IPO, as the stock opened at a massive discount and then hit the lower circuit, leading to substantial losses for IPO investors.

A Promising Start Turns into a Disappointment

The IPO, which was priced at ₹145 per share, promised to raise funds for various corporate purposes, including factory renovations, equipment purchases, and meeting working capital requirements.

On paper, the company’s strong financial performance and reputation as a supplier for major companies like Shoppers Stop, Hindustan Unilever (HUL), Lenskart, and Godrej & Boyce created positive expectations for the listing.

However, when the stock finally made its debut on the National Stock Exchange (NSE) SME segment, it quickly became clear that the reality was far from expectations.

The shares of Rexpro Enterprises listed at ₹117.00, which was 19.31% lower than the issue price of ₹145.

This steep decline in the stock price from the opening price marked a significant blow to IPO investors who had hoped for a listing gain.

Instead of the anticipated gains, the opening of the shares below the issue price sent a shockwave through the market, leaving investors scrambling.

A Further Plunge into Lower Circuit

Just when things seemed to be getting worse, the stock price continued its downward trajectory, triggering a “lower circuit” limit of ₹111.15 per share.

This price represented a further drop of 5.03% from the opening price of ₹117.00. Once a stock hits the lower circuit limit, it is unable to trade below that price for the remainder of the trading day, preventing any further losses for investors in the short term.

However, for IPO investors, this represented a significant hit, as the shares were now trading at a loss of 23.34% from the issue price.

This means that IPO investors are currently facing a loss of ₹33,850 per lot, with the lot size being 1,000 shares.

This is a substantial loss for those who had invested in the hope of seeing immediate returns from the IPO.

The immediate drop in stock price and subsequent lower circuit hit have left investors in a tough position, with their initial optimism dashed and their investments significantly down.

IPO Subscription: Strong Demand, Weak Listing

While the listing day was disappointing for investors, it’s important to note that the IPO itself was met with overwhelming interest during the subscription phase.

The Rexpro Enterprises IPO was subscribed 17.67 times overall, with the retail portion being subscribed a particularly strong 27.12 times.

This indicates that there was considerable demand for the stock among individual investors, who believed in the company’s potential and expected positive returns from the listing.

In total, the IPO raised ₹53.65 crore, with ₹47.13 crore raised through the issue of new shares. The remaining ₹6.52 crore was raised via the Offer for Sale (OFS) segment, where existing shareholders sold a portion of their holdings.

The proceeds from the new shares issued will be used for multiple purposes, such as renovating the company’s factory, purchasing new equipment, expanding its working capital base, and funding its inorganic growth strategy.

Despite these positive steps, the stock’s poor debut on the market has left investors questioning the company’s valuation and long-term prospects.

Rexpro Enterprises: A Closer Look

Founded in March 2012, Rexpro Enterprises operates from Vashi, Maharashtra, and is primarily focused on manufacturing a wide range of furniture for offices, hospitals, and residential spaces.

The company is known for its quality products and has established relationships with several well-known companies across various sectors.

Its client roster includes major players such as Shoppers Stop, Hindustan Unilever (HUL), Lenskart, and Godrej & Boyce, lending the company credibility and market strength.

From a financial standpoint, Rexpro Enterprises has demonstrated impressive growth. In FY 2024, the company reported a staggering 722% increase in its net profit, which reached ₹5.18 crore.

This was on the back of a 32% rise in revenue, which amounted to ₹83.01 crore. The company’s first-half performance for FY 2024-25 (April-September 2024) also showed positive results, with net profit of ₹4.08 crore and revenue of ₹49.56 crore.

These figures suggest that Rexpro is in a strong financial position, having weathered market challenges and expanded its operations successfully.

However, despite these positive financials, the company’s stock market debut has been underwhelming.

The poor listing performance raises concerns about the company’s ability to generate investor confidence in the public market. While the company’s fundamentals seem solid, the market reaction has been less favorable.

Market Sentiment and Future Prospects

The listing failure of Rexpro Enterprises underscores the unpredictable nature of stock market performances, especially for companies making their debut in the SME segment.

Although the company’s IPO was highly subscribed, the stock’s immediate underperformance raises questions about its valuation, investor sentiment, and broader market conditions.

For IPO investors, the situation is dire, with the stock’s substantial drop resulting in significant losses.

Investors are now left wondering whether the stock will rebound in the coming weeks or if it will continue to struggle.

In the short term, investors may choose to hold onto their shares in the hope of a recovery, or they may decide to cut their losses and exit the stock, depending on their risk tolerance and long-term investment strategy.

For Rexpro Enterprises, the company now faces the challenge of proving its worth to the market. The disappointing listing performance could affect its reputation among investors, and the company will need to take strategic actions to restore investor confidence.

This may involve better communication about future growth prospects, improved financial performance, and a focus on expanding its market share.

Final Remarks: A Wake-Up Call for IPO Investors

The listing of Rexpro Enterprises serves as a reminder of the risks inherent in investing in IPOs, particularly those in the SME segment.

Despite strong demand during the subscription phase and solid financials, the stock’s poor debut illustrates how market sentiment, investor expectations, and broader market conditions can have a significant impact on a company’s performance once it hits the public markets.

For those who invested in the Rexpro Enterprises IPO, the immediate loss of ₹33,850 per lot is a harsh lesson in the volatility of the stock market.

Whether or not the stock will recover and offer a positive return in the future remains to be seen, but one thing is clear: investors should always approach IPO investments with caution, conducting thorough research and understanding the risks involved.

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