The much-anticipated initial public offering (IPO) of Shipwaves, a logistics technology startup, made its debut on the BSE SME platform on Thursday, May 30, 2024. The listing, however, failed to generate any initial excitement among investors, opening at par with its issue price before swiftly falling into negative territory.
A Tepid Market Debut
Shipwaves shares were listed on the Bombay Stock Exchange's SME segment at ₹66 per share, which was exactly its final issue price. The lack of a premium on listing signaled cautious investor sentiment from the outset. The stock's journey post-listing was brief and downward. It quickly hit the 5% lower circuit, plunging to ₹62.70 per share. This lower circuit restricts the stock from falling further in that trading session, effectively freezing selling pressure at that level.
The company's IPO, which was open for subscription from May 23 to May 27, 2024, was a fresh issue of 34.8 lakh equity shares. This means all proceeds from the ₹22.97 crore raised will go directly to the company for its growth initiatives, not to existing shareholders. The IPO was priced in the band of ₹63 to ₹66 per share, with the final price set at the upper end of the range.
Understanding the Company and IPO Details
Shipwaves operates as a Software-as-a-Service (SaaS) platform that aims to simplify and digitize logistics operations for exporters, importers, and freight forwarders. The platform provides tools for rate discovery, shipment management, and documentation. The funds raised through this SME IPO are earmarked for specific corporate purposes.
The net proceeds are intended for:
- Funding capital expenditure requirements.
- Meeting working capital needs.
- Investing in technology development and software.
- Covering general corporate expenses.
Beeline Capital Advisors acted as the sole book-running lead manager for the public offer, while Bigshare Services was the registrar. Market watchers noted that the IPO received a mixed response during the subscription period, which may have foreshadowed the flat listing.
What Does a Lower Circuit Listing Mean for Investors?
The immediate hit of the lower circuit on debut day is often interpreted as a sign of weak demand or profit-booking by investors who received allotments. For retail investors who subscribed to the IPO, the flat listing followed by a decline means their investment is currently at a paper loss, at least for the short term. The stock being locked in the lower circuit also implies very low liquidity, making it difficult for shareholders to exit their positions on the listing day itself.
Analysts often advise that investments in SME IPOs, while offering high growth potential, come with higher volatility and risk compared to mainboard listings. The performance on the first day is not always indicative of long-term potential, but it reflects the initial market sentiment towards the company's valuation and business prospects. Investors will now closely monitor Shipwaves' quarterly financial performance and its ability to deploy the raised capital effectively to drive growth.
The focus shifts to whether the company can leverage the fresh capital to scale its operations and improve its financial metrics, which could, in turn, influence its stock price in the coming quarters. For now, the debut serves as a reminder of the inherent uncertainties in the IPO market, especially for smaller companies listing on the SME platform.
