Pyramid Technoplast IPO: Stock ends in lower circuit on listing day. What should investors do?

The shares of Pyramid Technoplast had a flat-to-positive listing on Tuesday, mainly due to market conditions despite receiving good response from investors for the IPO.

The stock listed at a mild premium of 13% over the issue price. However, it came under selling pressure post the listing and was locked in a 5% lower circuit.

On day one, the shares closed just 5.8% higher than the IPO price of Rs 166.

Pyramid Technoplast is an industrial packaging company engaged in the business of manufacturing polymer-based molded products (polymer drums) mainly used by chemical, agrochemical, specialty chemical, and pharmaceutical companies for their packaging requirements.

The company has a strong brand presence and a wide customer base, and it is also expanding its operations. It has strategic locations for its manufacturing units.

Analysts say investors may choose to hold the stock for the long term or exit depending on the risk appetite.

There are some risks to the company’s business such as competition from new entrants, fluctuations in the price of raw materials, and changes in government policies.”The company has experienced negative cash flow in the past. Nevertheless, the IPO is fairly priced at a P/E of around 16.24x. Investors who applied for listing gains may either choose to exit or hold it with a stop loss at the issue price,” said Pravesh Gour, Senior Technical Analyst, Swastika Investmart.

Aastha Jain of Hem Securities too echoed the same views that allotted investors may hold the stock for the long term.

The company said net proceeds from the fresh issue will be used towards debt repayment in part, funding working capital requirements, and other general corporate purposes.

For the year ended March 2023, the company’s revenue from operations stood at Rs 480 crore, while net profit was at Rs 31.76 crore.

PNB Investment Services and First Overseas Capital were the book-running lead managers while Bigshare Services was the registrar.

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