Srivari Spices and Foods based in Telangana had an entry, into the stock market despite a market correction. This was driven by demand for its public offering (IPO) and strong financial performance. The stock opened at Rs 101.50 experiencing a surge of 141.7% compared to its IPO price of Rs 42. Given the response to its IPO, which was oversubscribed 418.5 times the company intends to allocate the raised funds, for both working capital and growth purposes.
Srivari Spices and Foods, a Telangana-based manufacturer of spices and flour, has made an impressive entry into the stock market despite a correction in equity markets on August 18. This strong debut was propelled by robust subscription numbers for its IPO and solid financial performance, even though the company carries higher levels of borrowing.
Upon commencing trading on the NSE SME, the stock started the day at Rs 101.50, surging by an impressive 141.7 percent from its issue price of Rs 42, which also marked its lowest point of the day. The stock continued its ascent, reaching Rs 106.55 in the morning session. By 11:37 AM IST, the stock had risen by a remarkable 148.81 percent to Rs 104.45. Trading volume for the stock stood at 11.97 lakh shares.
Notably, the listing price exceeded the premium observed in the grey market, an unofficial platform for IPO share trading prior to listing. Analysts noted that the grey market was indicating a premium of around 60 percent.
During the IPO period from August 7 to August 9, the company, which operates primarily in Telangana and Andhra Pradesh, raised Rs 9 crore through an oversubscribed offering. The subscription rate was an impressive 418.5 times. The IPO exclusively consisted of a fresh issue of 21.42 lakh equity shares, with a price band set at Rs 40-42 per share.
Srivari Spices employs two business models: direct-to-customer and business-to-business. The company intends to allocate the majority of the IPO proceeds, which amount to Rs 5.92 crore, towards its working capital requirements. Additionally, the funds will be used for general corporate purposes.
Founded by Neihaa Rathi and Rathi Narayan Das, the company has demonstrated strong financial performance in recent years. In FY23, the company’s profit surged by an impressive 329 percent year-on-year to reach Rs 3.13 crore, while its revenue saw a significant increase of 103 percent, reaching Rs 35.8 crore compared to FY22.
However, the company experienced a notable increase in finance costs during FY23, which rose to Rs 0.86 crore from Rs 0.11 crore in the previous year. This rise in costs can be attributed to the substantial increase in borrowings, which reached Rs 12.83 crore by the end of March in FY23, a notable rise from Rs 2.77 crore in FY22.
