Piotex Industries IPO lists at 16% premium, hits 5% upper circuit up on listing

Shares of Piotex Industries Ltd, a leading yarn and cotton bale supplier, made a decent debut on Friday, May 17, with the stock listing at a 16% premium on the BSE SME platform.

The Piotex Industries stock opened the session at ₹109 compared with its initial public offering (IPO) of ₹94. Within minutes of trade, the stock hit the 5% upper circuit at ₹114.45.

Since the lot size for the Piotex Industries IPO was 1,200 shares, successful bidders who were allotted shares in the public issue would have been sitting on a profit of at least ₹24,540 (₹20.45 x 1,200) after the stock hit the upper circuit in early trade.

The ₹14.47-crore Piotex Industries IPO, which was open for subscription from May 10 to May 14, had received an overwhelming demand from investors. The issue was oversubscribed by more than 107 times, with bids received for 15.7 crore shares against just 14.6 lakh shares on offer, according to data available on BSE.

The non-institutional investor (NII) category was overbooked by 115 times, while the portion reserved for retail investors was subscribed more than 93 times.

The Piotex Industries IPO was a fixed-price issue, with shares of face value of ₹10 each being offered at ₹94 apiece. The IPO comprised entirely a fresh issuance of 15.4 lakh shares, with no offer-for-sale (OFS) component. The lot size, or the minimum bid quantity, for an application was 1,200 shares.

The company said that net proceeds from IPO would be utilised towards funding working capital requirements and general corporate purpose.

Pune-based Piotex Industries Ltd began operations in 2019. The company is engaged in contract manufacturing and trading of yarns, fabrics, and cotton bales for various purposes such as apparel and home textiles. The company also manufactures cotton yarn under an outsourcing model.

Its two main business areas are trading in cotton bales, synthetic fibers, cotton yarns, and fabrics; and contract labour and fabric weaving.

Under the trading division, the company manufactures and trades in cotton bales and cotton yarn in the textile centres of Maharashtra like Malegaon, Ichalkaranji and Bhiwandi. The company also supplies cotton yarn to Burhanpur and Ahmedabad. For its end product, cotton yarn, the company has entered into an exclusive distribution agreement with Babasaheb Deshmukh Industries Pvt. Ltd.

Under the contract labour arrangement, the company supplies the yarn to the contract workers and the weaving mill who carry out the weaving process at a contractually agreed price and return the finished product. The finished product, i.e. the fabric, is then sold to customers.

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