Malpani Pipes Lists at 4% Discount on BSE SME Despite Strong IPO Response, Hits Lower Circuit

Malpani Pipes And Fittings Limited, a manufacturer of high-grade plastic pipes operating since 2017, made a disappointing entry into the public markets on Monday, February 4, 2025. The company, which manufactures HDPE, MDPE, and LLDPE pipes under the 'Volstar' brand, commenced trading on BSE SME with an unexpected significant discount despite massive IPO oversubscription numbers.

Malpani Pipes Listing Details 

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The company's market debut presented a stark disconnect between primary market enthusiasm and secondary market valuation:

Listing Time & Price: When trading commenced at market open, Malpani Pipes shares debuted at ₹85.90 on BSE SME, showing a significant discount of 4.56% against the issue price of ₹90. This weak opening came as a surprise given the IPO's massive oversubscription of 146.93 times.

Issue Price Context: The company had priced its IPO between ₹85 and ₹90 per share, ultimately fixing the final issue price at ₹90. The market's response suggests this pricing may have been viewed as aggressive despite strong fundamentals.

Price Evolution: By 11:24 AM IST, the stock showed further weakness, trading at ₹83.50 after hitting an intraday low of ₹81.61, representing a loss of 7.22% from the issue price.
 

First-Day Trading Performance of Malpani Pipes

The trading activity showed active participation with bearish sentiment:

Volume and Value: Within the first few hours, trading volume reached 6.30 lakh shares, generating a turnover of ₹5.38 crore, with 100% of traded quantity marked for delivery.

Demand Dynamics: The stock's trading pattern showed buy orders for 38,400 shares against sell orders for 1,23,200 shares, indicating selling pressure at current levels.
 

Market Sentiment and Analysis

Market Reaction: Weak opening followed by lower circuit
Subscription Rate: The IPO had been massively oversubscribed by 146.93 times
Pre-listing Interest: Anchor investors had invested ₹7.20 crore before the public issue

Growth Drivers and Challenges 

Expected drivers of future performance:

• Wide geographical reach
• Strategic manufacturing location
• Diversified product portfolio
• Experienced management team
• Quality focus
• Growing market opportunity
   

Potential challenges:

• High competitive intensity
• Market fragmentation
• Raw material price volatility
• Working capital intensity
• Limited operating history
• Regulatory compliance costs

Utilisation of IPO Proceeds 

The ₹25.92 crore raised through fresh issue will be used for:

• Capital expenditure for machinery
• Repayment of debt
• General corporate purposes

Financial Performance 

The company has shown strong growth:

• Revenue of ₹141.16 crore in FY2024
• 8M FY2025 (ended November 2024) showed revenue of ₹84.55 crore with PAT of ₹5.09 crore
• Net Worth of ₹19.73 crore as of November 2024
• Total borrowings of ₹35.74 crore
• Total assets of ₹90.76 crore as of November 2024

As Malpani Pipes begins its journey as a listed entity, market participants will closely monitor its ability to maintain growth momentum and profitability. The significant disconnect between IPO subscription and listing performance serves as a reminder that high subscription numbers don't always translate to strong listing gains. The company's ability to execute its expansion plans while managing competition and costs will be crucial for potential price recovery and long-term investor confidence.