Davin Sons Retail makes weak debut, shares list at 20% discount on BSE SME platform

Shares of readymade garments manufacturer Davin Sons Retail Ltd made a weak debut on the BSE SME platform on Thursday, with the stock listing at a 20% discount to the IPO price.

Davin Sons Retail shares opened the session at ₹44 apiece on the BSE SME platform, down 20% compared to its initial public offering (IPO) price of ₹55 per piece. However, within minutes after the listing the stock rallied as much as 5% to hit the upper circuit limit at ₹46.2 apiece.

Within initial 10 minutes of trade, as many as 1.54 lakh shares, with a trading value of ₹67.72 lakh, changed hands on the stock exchange. The company’s market capitalisation stood at ₹24.31 crore.

As the minimum bid quantity to apply for the Davin Sons Retail IPO was 2,000 shares, successful bidders who were allotted shares in the primary issues faced potential losses of ₹22,000 (₹11 x 2,000) per lot as soon as the stock started trading in the secondary markets.

Davin Sons Retail IPO details

The ₹8.78-crore Davin Sons Retail IPO was open for subscription from January 2 to January 6. At the end of the three-day bidding period, the BSE SME IPO was oversubscribed 120.8 times, with bids received for 18.3 crore shares compared to 15.16 lakh shares on offer.

The portion reserved for retail investors was overbought 164.8 times, while non-institutional investors’ (NIIs) portion was overbid by 66.1 times.

The public offer was a fixed-price issue consisting of a fresh issuance of 15.96 lakh shares. The IPO shares price was set at ₹55 apiece.

Davin Sons Retail Ltd was established in 2022. It is primarily engaged in the manufacturing of ready-made garments and the distribution of FMCG products.

The company manufactures readymade garments offering a diverse range of high-quality jeans, denim fabrics, denim jackets and T-shirts for other brands under its garments business. In the FMCG segment, Davin Sons Retail distributes a range of products of other brands to various retailers, shopkeepers and other distributors.

The company purchases the bulk stock of products from the seller companies, or vendors, and sells them to the retailers, shopkeepers and other distributors in small quantities.

Its garments business is spread across Delhi, Haryana, West Bengal and Uttar Pradesh. The company’s FMCG products business caters to customers in Delhi, Haryana, Punjab, Rajasthan and Arunachal Pradesh.

Davin Sons plans to use the proceeds from the IPO for strengthening its business operations. A portion of the funds will be allocated towards capital expenditure for buying a warehouse. Additionally, a portion of the funds will be used to finance working capital requirements. The remaining funds will be utilised for general corporate purposes.

For the financial year 2023-24, Davin Sons Retail’s revenue increased by 242% to ₹13.4 crore compared to ₹3.9 crore in FY 2022-23. The company’s profit after tax (PAT) grew 190% to ₹1.6 crore in FY24 compared to ₹56.6 lakh in FY23.