Muthoot Microfin IPO Lists -5.40% lower, tapers further

Moderate listing and tepid close for Muthoot Microfin Ltd

Muthoot Microfin IPO had a weak listing on 26th December 2023, listing at a small discount of -5.40% to the issue price, and tapering further from the listing price. While the closing price on 26th December 2023 was below the IPO issue price for the day, it also closed below the listing price of the IPO. For the day, the Nifty ironically closed 92 points higher while the Sensex closed a full 230 points higher. Both the Nifty and the Sensex showed strength through the day and despite such strength shown by the markets overall, the listing of Muthoot Microfin IPO was weak and tepid, as was the close for the day.

IPO subscription and pricing details

The stock had seen a relatively moderate subscription in the IPO. The subscription was 12.30X  overall and QIB subscription was at 18.35X. In addition, the retail portion had got subscribed 8.00X in the IPO while the HNI / NII portion also got a healthy subscription of 13.87X. Hence the listing was expected to be moderate at best for the day. However, the listing performance got marred despite the overall markets being robust. However, the to the credit of the stock, there was not too much price damage on the stock. Here is the Muthoot Microfin Ltd listing story on 26th December 2023.

The IPO price of Muthoot Microfin Ltd was fixed at the upper end of the band at ₹291 which was anyways along expected lines considering the relatively modest subscription in the IPO. The anchor investment allocation had also happened at ₹291 per share. The price band for the IPO was ₹277 to ₹291 per share. On 26th December 2023, the stock of Muthoot Microfin Ltd listed on the NSE at a price of ₹275.30, a discount of -5.40% on the IPO issue price of ₹291 per share. On the BSE also, the stock listed at ₹278, a discount of -4.47% on the IPO issue price of ₹291 per share.

How the stock of Muthoot Microfin Ltd closed on both exchanges

On the NSE, Muthoot Microfin Ltd closed on 26th December 2023 at a price of ₹265.95 per share. That is a first day closing discount of -8.61% on the issue price of ₹291 per share and also a discount of -3.40% on the listing price of ₹275.30 per share. In fact, the closing price of the day turned out to very close to the low price of the day and traded for most of the day below the listing price. On the BSE also, the stock closed at ₹266.20. That represents a first day closing discount of -8.52% on the IPO issue price of ₹291 per share and also a discount of -4.24% on the listing price on the BSE of ₹278 per share. On both the exchanges, the stock listed well below the IPO issue price and also lost further ground at the close of Day-1. The low price of the day and the closing price were pretty close to each other, but that did not talk about the much deeper volatility in the stock price. The high price and the low price did betray a lot of volatility in the stock price, although both these prices were well away from the 20% circuit filters applicable to the stock of Muthoot Microfin Ltd on the day of listing i.e., 26th December 2023.

Price volume story on the NSE

The table below captures the opening price discovery in the pre-open period on the NSE.

Data Source: NSE

Let us look at how the stock traversed on the National Stock Exchange (NSE) on 26th December 2023. On Day-1 of listing, Muthoot Microfin Ltd touched a high of ₹281 on the NSE and a low of ₹265.50 per share. The discount to the listing price sustained through most part of the day while the stock very rarely went above the IPO issue price at any point during the trading session. The high and low price range does tell a lot about the volatility during the day, although the prices stayed well clear of the circuit filters. Mainboard IPOs do not have an upper or lower circuit of 5%, unlike SME IPOs since they trade in the normal equity segment and not in the trade to trade segment.

However, the stock of Muthoot Microfin Ltd was subjected to 20% circuit filter on either. That translated into an upper circuit price of Muthoot Microfin Ltd on the NSE at ₹330.35 and a lower circuit price of the stock at  ₹220.25 per share. The low price and the high price of the day was well clear of the circuit filters on the NSE. On Day-1 of listing, the Muthoot Microfin Ltd stock traded a total of 100.31 lakh shares on NSE amounting to value of ₹272.97 crore during the day.  The order book during the day showed a lot of back and forth with the bias clearly in favour of the sellers, with some buying emerging towards the end. The stock closed the day with pending buy orders of 176 shares on the NSE.

Price volume story on the BSE

Let us look at how the stock traversed on the Bombay Stock Exchange (BSE) on 26th December 2023. On Day-1 of listing, Muthoot Microfin Ltd touched a high of ₹280.80 on the BSE and a low of ₹265.30 per share. The discount to the listing price sustained through most part of the day while the stock very rarely went above the IPO issue price at any point during the trading session. The high and low price range does tell a lot about the volatility during the day, although the prices stayed well clear of the circuit filters. Mainboard IPOs do not have an upper or lower circuit of 5%, unlike SME IPOs since they trade in the normal equity segment and not in the trade to trade segment.

However, the stock of Muthoot Microfin Ltd was subjected to 20% circuit filter on either. That translated into an upper circuit price of Muthoot Microfin Ltd on the BSE at ₹333.60 and a lower circuit price of the stock at  ₹222.40 per share. The low price and the high price of the day was well clear of the circuit filters on the BSE. On Day-1 of listing, the Muthoot Microfin Ltd stock traded a total of 7.00 lakh shares on BSE amounting to value of ₹19.08 crore during the day.  The order book during the day showed a lot of back and forth with the bias clearly in favour of the sellers, with some buying emerging towards the end. The stock closed the day with pending buy orders, albeit marginal on the BSE.

Market capitalization, free float, and delivery volumes

While the volumes on the BSE were not as much as on the NSE, the trend was once again the same. The order book through the day showed a lot of selling with buying emerging in the final part of the trading session. The rally in the Nifty and the Sensex really did not deter the stock too much as it fell marginally below the issue price and the listing price. However, it must be said that the stock did take support during the trading session. On the NSE, out of the total 100.31 lakh shares traded during the first day of trading, the deliverable quantity represented 47.52 lakh shares or a deliverable percentage of 47.37% on the NSE, which is at par with the routine listing day median on the NSE.

That shows a lot of speculative action on the counter mixed with delivery buying. Even on the BSE, out of the total 7.00 lakh shares of quantity traded, the deliverable quantity at a gross across client level was 3.01 lakh shares representing total deliverable percentage of 43.01%, which is almost at par with the delivery ratio on the NSE. Unlike the SME segment stocks, which are on T2T on the day of listing, the mainboard IPOs permit intraday trading even on the day of listing.

At the close of Day-1 of listing, Muthoot Microfin Ltd had a market capitalization of ₹4,538.50 crore with free-float market cap of ₹635.39 crore. Muthoot Microfin Ltd has issued capital of 1,704.92 lack shares with a par value of ₹10 per share.