Shyam Metal, Sona BLW surprise the street, soar over 20% on trading debut

Market was expecting Sona to list at a muted premium and hoped Shyam Metalics would gain more than 30% on listing

Shares of Shyam Metalics and Sona BLW Precision Forgings gained more than 20 per cent each during their stock market debut amid buoyancy in the secondary market.  

Shares of Kolkata-based integrated steel manufacturer rose as much as 30 per cent over its issue price. However, the stock gave up some of the gains to end at Rs 376, up Rs 70, or 22.8 per cent over its IPO price of Rs 306. Auto parts maker Sona BLW’s shares closed 25 per cent over its IPO price of Rs 291 per share.

The gains surprised the Street as it was expecting Sona to list at a muted premium. On the other hand, market players were hoping that Shyam Metalics would gain more than 30 per cent on listing.

The initial public offering (IPO) of Shyam Metalics had garnered 121 times subscription and generated bids of more than Rs 78,000 crore. The qualified institutional buyer (QIB) portion was subscribed 153 times; the high net worth individual part saw 340 times subscription, and the retail portion was subscribed nearly 12 times. Shyam Metalics’ IPO size was Rs 909 crore, of which Rs 657 crore was fresh fundraise to help retire debt.

The company is currently valued at Rs 9,587 crore.

In comparison, Sona BLW’s IPO had received a relatively lukewarm response with just a 2.3 subscription. The QIB portion of this issue was subscribed 3.54 times, the HNI portion just 0.40 times and the retail portion 1.6 times. Sona BLW is currently valued at Rs 21,165 crore.

"Both the companies are present in niche space and have good business fundamentals and financials. Shyam Metalics witnessed good listing premium given its presence in the metal space which is in an upcycle and that too in the value-added steel products. We like Sona Comstar given its presence in the fast growing global EV market, diversified portfolio across categories and robust financials. Though the valuation at about 74 times P/E appears fully priced in, given its thrust in fast evolving EV space both in India and globally, market would like to give premium to such emerging growth story," said Hemang Jani, Head Equity Strategist, Broking & Distribution, Motilal Oswal Financial Services.