The stock market debut of Sundrex Oil Company turned out to be disappointing for investors.
The company’s shares were listed on the NSE Emerge platform on Tuesday, December 30, at a price much lower than expected. The shares debuted at ₹68.80, which is nearly 20 percent below the IPO price of ₹86.
Because of this weak listing, investors who were allotted shares in the SME IPO faced an immediate loss of around 20 percent on the first day itself.
After the listing, the total market capitalization of Sundrex Oil Company stood at approximately ₹92.15 crore, reflecting the poor market response.
Gray Market Signals Indicated Weak Sentiment
Even before the official listing, signs of weak demand were visible in the gray market. The gray market premium (GMP) for Sundrex Oil Company shares had dropped to zero, which clearly showed that investor enthusiasm had faded.
A zero GMP usually indicates that the stock is expected to list at or near its IPO price, or even below it.
Decline in GMP Before IPO Opening
According to data from Investorgain, Sundrex Oil Company’s unlisted shares were trading at ₹86 before listing, which was exactly the IPO price. This confirmed the absence of any gray market premium.
Interestingly, the situation was different earlier. Just one day before the IPO opened, the GMP was around 19.77 percent, suggesting strong initial interest.
However, as soon as the IPO bidding process started, the GMP declined sharply. As per IPO Watch, the shares also failed to show any premium in the unlisted market, signaling caution among investors.
Complete Details of Sundrex Oil Company IPO
Sundrex Oil Company launched its initial public offering (IPO) earlier this month through a 100 percent fresh issue.
The company aimed to raise ₹32 crore from the public issue. The IPO price band was fixed between ₹81 and ₹86 per share.
Investors had to apply for a minimum lot size of 3,200 shares, which required an investment of about ₹2.75 lakh at the upper price band. Additional applications could be made in multiples of 1,600 shares.
The IPO remained open for subscription from December 22 to December 24. It received full subscription within the three-day bidding period.
Among all categories, retail investors showed the highest interest, subscribing nearly two times their allotted quota.
Use of IPO Funds
The company had clearly stated how it planned to use the funds raised from the IPO. A major portion of the proceeds was to be used for working capital requirements.
In addition, the funds were intended for capital expenditure, as well as partial or full repayment of certain secured and unsecured loans.
The remaining amount was planned to be used for general corporate purposes and to cover IPO-related expenses.
