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Omnitech Engineering Shares Slump 10% in Weak Market Debut

Omnitech Engineering's shares had a weak debut, listing at Rs 205 on the BSE, nearly 10% below its IPO price of Rs 227. The stock opened at a discount on the NSE as well but saw buying interest, recovering over 9% from its listing price to an intra-day high. The listing performance was worse than grey market premiums had suggested. The company plans to use IPO proceeds for new facilities, solar equipment, and debt repayment, though analysts cite high borrowings and competition as near-term concerns.

Key Points: Omnitech Engineering Lists at 10% Discount to IPO Price

  • Listed at 10% discount to IPO
  • Recovered 9% from listing low
  • IPO was subscribed 1.14 times
  • High borrowings a concern for outlook
2 min read

Omnitech Engineering shares list at Rs 205, nearly 10 pc below IPO price

Omnitech Engineering shares list at Rs 205, a 10% discount to IPO price of Rs 227, despite later recovering some losses during trading.

"The listing was weaker than market expectations indicated by the grey market premium - Market Analysis"

New Delhi, March 5

Shares of Omnitech Engineering made a weak debut on the Indian stock exchanges on Thursday, listing at Rs 205 on the Bombay Stock Exchange, nearly 10 per cent below the company's IPO price of Rs 227 per share.

The precision-engineered components maker also listed at a discount on the National Stock Exchange of India, where the stock opened at Rs 202 apiece, about 11 per cent lower than its issue price.

Despite the weak start, the stock witnessed buying interest soon after listing. Omnitech Engineering shares rose more than 9 per cent from the listing price to touch an intra-day high of Rs 224 on the BSE.

However, even at the day's high, the stock remained below its IPO price.

The listing was weaker than market expectations indicated by the grey market premium, which had suggested that the shares could list at a discount of around 2-3 per cent ahead of the debut.

The company manufactures high-precision and safety-critical components for global original equipment manufacturers and serves more than 256 customers across 24 countries. Nearly 79 per cent of its revenue comes from exports.

According to the company, the funds raised through the IPO will be used to set up new manufacturing facilities in Rajkot, invest in solar equipment and repay part of its debt.

However, analysts say that relatively high borrowings and competition from industry players such as Azad Engineering, MTAR Technologies, and PTC Industries could keep the near-term outlook cautious.

The Omnitech Engineering IPO was open for subscription from February 25 to February 27, with a price band of Rs 216 to Rs 227 per share.

According to data from the National Stock Exchange of India, the Omnitech Engineering IPO was subscribed 1.14 times overall.

The retail investors' portion was subscribed 33 per cent, while the non-institutional investors' category saw 73 per cent subscription.

The qualified institutional buyers' segment received a subscription of 2.86 times.

- IANS

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Reader Comments

P
Priya S
A 10% discount on listing is quite painful for retail investors. The company's export-heavy revenue is good, but high debt is a big red flag 🚩. Hope the funds are used properly for the Rajkot facility.
A
Aman W
Bought a few shares after listing at Rs 205. It recovered to 224 during the day! Sometimes a weak listing creates a good entry point for long-term. Their global customer base looks solid. Let's see.
S
Sarah B
Interesting case study. The market sentiment seems to have overruled the grey market premium. Competition from Azad Engineering and MTAR is no joke. Investors are probably pricing that in.
K
Karthik V
Yaar, another IPO listing at a discount. SEBI should maybe look at pricing these issues more reasonably. The promoters and bankers get their money, retail gets burnt. Not fair.
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Nisha Z
The recovery during the day is a positive sign. Manufacturing for global OEMs is a good space to be in. If they use the IPO money to reduce debt and expand, it could be a good bet for 2-3 years. 🤞

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