Shares of Uma Export Ltd, which trades in agricultural produce and commodities, made a strong debut on the stock exchanges on Thursday, hitting its upper circuit and surprising analysts.
The stock opened at a 17.6 percent premium to its sale price at Rs 80 on the BSE and went up to Rs 84, the maximum price set by the exchange on its first day of trading.
It was locked in its upper circuit, which marked a 23.53 percent gain over its sale price and a 5 percent gain over its opening price.
As the stock is available in the trade-for-trade segment, it has a circuit limit of 5 percent on the upper as well as the lower side.
Uma Exports had logged a trading volume of 1.44 million equity shares on the BSE and 1.447 million shares on the NSE at the time this article was written.
Experts who had expected a muted listing for the company advised investors to hold the stock if they were in for the long haul; conservative investors should use this rally for profit booking, the experts said.
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"Conservative investors should look to book or exit on listing day and risk-seekers may consider holding the investment for the long term; if non-allotted investors wish to buy on a listing day it is better to avoid," said Prashanth Tapse, vice president (research) at Mehta Equities.
Tapse had expected a muted listing considering lower-than-expected investor demand for its initial public offering (IPO). The Rs 60-crore public issue of Uma Exports was subscribed 7.67 times during March 28-30.
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For investors who had been allotted the shares, Astha Jain, senior research analyst at Hem Securities, recommended an exit on listing day.
"Long-term investors can hold the stock and try to exit at a premium in a longer duration of time," Jain said.
Likhita Chepa, senior research analyst at CapitalVia Global Research, recommended that investors hold the allotted shares for a short period of time and keep an eye on its planned expansion.
Uma Exports markets, trades and distributes agricultural products including sugar, spices like dry red chillies, turmeric, coriander, cumin seeds, and food grains such as rice, wheat, corn and sorghum as well as tea, pulses and agricultural feed like soyabean meal and rice bran de-oiled cake.
The company caters to both the domestic market and also supplies the products to international markets such as Malaysia, Sri Lanka and Bangladesh.
Uma Exports’ revenue declined by 7.2 percent to Rs 750.7 crore in financial year 2021 compared to the previous year although it managed to increase its profit by an impressive 46 percent to Rs 12.18 crore.
The company will use the IPO proceeds to meet working capital requirements. Hence, "we can expect the company to grow in the near future," said Chepa.
Disclaimer: The views and investment tips offered by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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