Vivaa Tradecom IPO Listing: Shares Debut at 20% Discount, Textile Company Expresses Disappointment
Vivaa Tradecom IPO Listing
Vivaa Tradecom IPO Listing: Underwhelming Debut for Textile Company
Disappointing Market Entry
The initial public offering (IPO) of Vivaa Tradecom made a rather disappointing debut as the textile company’s shares entered the market at a substantial 20% discount.
This lackluster market entry unfolded on the SME (Small and Medium Enterprises) platform of the Bombay Stock Exchange (BSE), leaving investors grappling with losses instead of gains on their investments.
Subscription Struggles
Despite extended subscription deadlines, the response to the IPO was far from overwhelming. Retail investors took the lead in subscribing to the offering, while the portion reserved for other investors remained notably undersubscribed even after a full five days.
The IPO had initially issued shares at a price of Rs 51, but the listing price on BSE SME was a meager Rs 40.80.
This translated to a significant 20% reduction in capital for investors who had participated in the IPO, causing much dismay and disappointment.
Market Turbulence
In the post-listing scenario, Vivaa Tradecom’s shares exhibited substantial volatility, fluctuating from reaching the lower circuit at Rs 38.76 to surging to the upper circuit at Rs 42.82, finally closing the day at Rs 42.
As a result of this rollercoaster ride, IPO investors found themselves dealing with an approximately 18% loss on the very first day. This abrupt and turbulent market performance undoubtedly raised concerns about the company’s prospects and left many investors reevaluating their investment decisions.
Subscription Insights
The IPO, which boasted a total value of Rs 7.99 crore, was open for subscription from September 27 to October 4.
While the IPO did eventually garner some attention, it did not receive the overwhelming response that is often seen with successful offerings. Investors remained cautious, with full subscription being achieved only on the final day of the offering.
In the four days leading up to the closing date, the IPO was subscribed just 0.91 times. Notably, retail investors accounted for 1.61 times of the total subscription on the fourth day, indicating their heightened interest and participation.
However, the overall subscription, which reached 1.81 times on the last day, was still short of being labeled as a resounding success.
The share reserved for retail investors was oversubscribed by 2.86 times, which was a relatively strong response, given the set allocation for this segment.
In contrast, the portion designated for other investors was undersubscribed, at only 0.70 times, further highlighting the lack of broader investor enthusiasm for the IPO.
Fund Utilization
The primary purpose of this IPO was to raise funds by issuing 15.66 lakh new shares with a face value of Rs 10.
The funds raised through this offering were intended to be used for various purposes, including meeting working capital requirements, addressing general corporate needs, and covering IPO-related expenses. However, with the underwhelming debut of the IPO, the company might find it more challenging to achieve its intended financial goals and utilization of the raised capital.
Diversification and Clientele
Vivaa Tradecom, established in 2010, is primarily engaged in the manufacturing of apparel, with a product portfolio that includes denim fabric and ready-made garments such as denim and cotton jeans for both men and women.
The company expanded its business horizons by venturing into the production of MDFD (Medium Density Fibreboard) boards, commonly used in the furniture industry.
To support this diversification, the company entered into an agreement with its associated firm, Rushil Decker. Notable clients of Vivaa Tradecom include Aditya Birla Fashion & Retail, Lajja Polyfab, Nandan Denim, Bajaj Impex, and Reliance Retail, signifying the company’s importance in the textile and apparel industry.
Financial Performance and Stability
When analyzing the financial health of the company, it becomes evident that Vivaa Tradecom has experienced notable fluctuations in its performance over recent years.
In the fiscal year 2021, the company reported a net loss of Rs 6.48 lakh. However, in the subsequent fiscal year 2022, the company managed to turn the tide and reported a net profit of Rs 44.39 lakh.
Despite this positive development, the company’s performance took a downturn in the fiscal year 2023, with the net profit dropping to Rs 25.48 lakh.
This inconsistency in earnings raised concerns about the company’s stability and ability to generate sustainable profits.
Furthermore, the revenue also saw a significant drop, declining from Rs 247.28 crore to Rs 134.02 crore on an annual basis in the last fiscal year of 2023, which was a sharp decline in a relatively short period.
Final Remarks
In conclusion, the IPO listing of Vivaa Tradecom has been far from stellar. With shares debuting at a 20% discount and the subsequent volatility, it has raised concerns about the company’s ability to perform consistently in the market.
The tepid response to the IPO subscription also reflects investor caution and skepticism about the company’s financial health and potential for future growth.
Vivaa Tradecom’s journey in the textile and apparel industry, as well as its recent diversification into the furniture industry, may require careful scrutiny and strategic planning to regain investor confidence and secure its future prospects in the market.
As investors and analysts continue to monitor the company’s performance, it remains to be seen whether Vivaa Tradecom can navigate these challenges and regain its footing in the market.
