Flair Writing Industries' impressive debut marks end of busy listing week

However, newly listed shares come off highs as caution sets in

Investors continued to lap up shares on listing day at huge premiums with Flair Writing Industries gaining as much as 69 per cent above its initial public offering (IPO) price on Friday. The country’s leading pen maker joined Tata Technologies, Indian Renewable Energy Development Agency (Ireda) and Gandhar Oil Refinery (India)—that listed with gains of at least 78 per cent—to mark stellar trading debuts this week.

Shares of Flair Writing closed at Rs 451, up Rs 147, or 48.4 per cent, over its issue price of Rs 304. The stock hit a high of Rs 514 and a low of Rs 451 on the NSE, where shares worth Rs 606 crore got traded. At the last close, Flair Writing was valued at Rs 4,752 crore, over 35 times its FY23 earnings.

However, some caution set in as shares of Flair finished the day at its 10 per cent lower limit over the discovered price of Rs 501 as the sell orders by far exceeded the buy orders. Exchanges conduct an hour-long price discovery session to iron out opening day volatility. Depending on the size of the company, its shares are allowed to move in a band of 10 per cent or 20 per cent over the discovered price. Other companies that listed this week also witnessed sharp price corrections, with Tata Tech and Gandhar Oil dropping 7 per cent each, while Ireda declining 4 per cent.

“After stellar listings, the newly-listed stocks have cooled off a bit with even Tata Tech declining 7 per cent. Investors went overboard in some cases and a course correction was due,” said Arun Kejriwal, founder, Kejriwal Research & Investment Services.

“However, if you look at the IPO demand, it shows that there is ample liquidity available in the market if the pricing is appropriate,” he added.

On Thursday, shares of Tata Tech, a product development and digital solutions provider for auto original equipment manufacturers, had almost trebled over their issue price. This pushed the market value of the company to Rs 53,820 from just Rs 20,000 crore in the IPO. Likewise, shares of Gandhar Oil, a manufacturer of white oils used in consumer and healthcare industries, saw its stock jump 78 per cent. Also, shares of Ireda, a state-owned power financer, also more than doubled during the first two trading days.

Taking advantage of the bullish investor sentiment, five companies launched their maiden share sales last week to mop up a cumulative Rs 7,377 crore. Amid a strong rally in shares of small- and mid-caps, four out of the five IPOs saw huge oversubscriptions with cumulative bids on them exceeding Rs 2.5 trillion. The momentum continued upon their listings until Friday after some investors rushed to book profits judging the gains as excessive.

In November, the Nifty Smallcap 100 finished the month with 12 per cent gain—most since February 2021, while the Nifty Midcap 100 rose 10.4 per cent, most since July 2022.