The company’s shares listed at Rs 1,535 apiece on the NSE, marking a premium of more than 13% over the IPO price of Rs 1,352. The stock then surged over 5% to trade at Rs 1,613 apiece, taking the gains to more than 19% from the issue price.
Listing performance vs grey market expectations
The decent listing beat grey market expectations. Ahead of the listing, the company’s unlisted shares were trading almost flat at the IPO price with zero to marginal grey market premium (GMP), according to websites tracking the unofficial market.
This came after the Rs 1,087-crore initial public offering of the auto-tech company was subscribed 2.68 times between March 4 and March 6. Qualified institutional buyers (QIBs) showed the most interest in the IPO, subscribing their reserved portion nearly 8.5 times. The portions reserved for non-institutional investors (NIIs) and retail investors, however, remained undersubscribed at 77% and 20%, respectively.
Should you buy, sell or hold?
Shivani Nyati, Head of Wealth at Swastika Investmart, said that weak demand from retail and non-institutional investors reflected cautious participation in the IPO.
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“Despite the strong listing gains, the muted retail interest suggests the stock may witness near-term volatility due to profit booking,” she said.
Overall, the outlook remains moderately positive but cautious, the analyst added.“Short-term traders can maintain a stop-loss at Rs 1,420, while long-term investors may hold with a stop-loss at Rs 1,320 while tracking business execution and growth in the auto electronics segment,” she said.
Harshal Dasani, Business Head at INVasset PMS, said Sedemac Mechatronics’ listing broadly reflects the current sentiment in the primary market, where investors have become far more valuation-sensitive.
“From a fundamentals perspective, Sedemac operates in a niche but promising automotive electronics segment, supplying engine and vehicle control systems to leading OEMs. The long-term opportunity remains intact as vehicle electrification, emission norms and increasing electronic content in automobiles drive demand for such components,” he said.
However, he noted that investors are also mindful of risks such as customer concentration and elevated valuations relative to current earnings.
“In the near term, the stock may trade in a narrow range as the market waits for earnings growth to justify the premium valuation embedded in the issue price,” the analyst said.
Sedemac Mechatronics, incorporated in 2007 and based in Pune, is a technology company focused on control electronics for automotive and industrial applications. The company designs and manufactures products such as powertrain controllers, motor control units and integrated starter-generator solutions.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times.)