Varmora Granito Lists at 4.7% Premium on NSE After a Slow Start to Its IPO

Varmora Granito shares began trading on Tuesday at Rs 155 on the National Stock Exchange, 4.72 percent above the Rs 148 upper end of the IPO price band. On BSE, the stock opened lower at Rs 152, a premium of 2.7 percent.

For a retail investor allotted the minimum lot of 101 shares, the NSE opening price worked out to a paper gain of roughly Rs 707. At the listing price, the company was valued at around Rs 3,540 crore.

From Empty Book to Listing Premium

The debut closes out an issue that started slowly. As we reported on opening day, the Rs 708.02 crore offer was covered just 0.11 times after its first session, and the institutional book had no bids at all.

That picture changed by the time bidding shut on September 24. The issue finished 1.58 times subscribed overall, with bids for about 5.35 crore shares against roughly 3.39 crore on offer. Qualified institutional buyers, absent on day one, ended up the strongest category at 3.16 times their quota. Retail investors took almost exactly their allotment at 1.0 times, while non-institutional investors fell slightly short at 92 percent.

In other words, the institutions arrived late, as they often do, but individual investors never really showed up in force. That lukewarm retail demand is consistent with the modest listing pop.

Listing Into a Falling Market

The timing did the stock no favours. Varmora Granito opened on a morning when the Sensex and Nifty slid to six-month lows, with nearly 200 BSE-listed stocks touching 52-week lows within the first 90 minutes of trade. A small premium on a day like that is arguably a better outcome than the numbers alone suggest.

The listing also comes as the primary market remains crowded. Several mainboard and SME issues are competing for the same pool of money this week, and recent debuts have ranged from sharp gains to flat openings at the issue price.

What the Money Is For

The IPO combined a fresh issue of about 2.16 crore shares worth Rs 320 crore with an offer for sale of about 2.62 crore shares worth Rs 388.02 crore, so the larger share of the proceeds goes to selling shareholders rather than the company.

The fresh capital is earmarked mainly for repaying or prepaying debt, including borrowings at subsidiaries Covertek Ceramica, Varmora Sanitarywares and Simola Tiles LLP, with the balance for general corporate purposes. Lower debt should ease interest costs for a business that is exposed to volatile gas prices and cyclical construction demand.

Promoters Bhavesh Vallabhdas Varmora, Hiren R Varmora and Pramodkumar Parsotambhai Patel held 52 percent before the issue, falling to about 47.04 percent afterward. JM Financial, Goldman Sachs (India) Securities and SBI Capital Markets managed the offer.

The Rajkot-based company makes glazed and polished vitrified tiles and ceramic tiles from plants in Gujarat's Morbi cluster. It now joins listed peers Kajaria Ceramics, Somany Ceramics and Asian Granito on the exchanges.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.