Valiant Labs shares hit upper circuit after debut; should you hold the stock or exit?

Shares of Valiant Laboratories were locked in the upper circuit on Friday, after making a strong debut at Dalal Street as it saw more demand after the debut. The stock was listed at a premium of 16 per cent over its issue price of Rs 140 at Rs 162.15 on NSE, while it debuted at Rs 161 on BSE.

Following the debut, the stock saw a strong debut from buyers and was locked in the buyer circuit of 5 per cent at Rs 170.25. The stock extended the overall gains to 22 per cent over the issue price, with a total market capitalization at Rs 793.73 crore. It did not see any selling after the initial move.

Valiant Laboratories has been added to BSE's 'T' group, which means the stock will be settled on a trade-to-trade basis as a surveillance measure. The circuit filter for the counter, on either side, will be capped at 5 per cent for the first 10 trading sessions and likely to be revised later.

Analysts are divided on the stock after a strong debut. Some suggest investors to book profits after debut, while others suggest to hold it for a longer run with a word of caution. Mostly, the stock is looking to be a decent play from a medium-to-long-term perspective, they suggest.

Shivani Nyati, Head of Wealth at Swastika Investmart, said Valiant Laboratories' listing was positive, with the company receiving a good response from investors. However, investors should carefully consider related risks as well. "Investors are advised to book profits and exit their positions, but those who want to hold for the long term should keep a stop loss at Rs 150," she said.

Valiant Laboratories offered its shares in the price band of Rs 133-140 apiece with a lot size of 105 equity shares. The Rs 156.46 crore IPO was entirely a sale of 1,08,90,000 fresh equity shares, which was open for bidding between September 27 to October 3. The issue was overall subscribed 29.76 times.

Valiant Laboratory on its debut delivered 20 returns to the investors. The company is a single product manufacturer, with a robust backward integrated business model, said Mahesh M Ojha, AVP – Research at Hensex Securities. "We suggest investors to book partial profits on the listing day itself, rest can be kept on hold for medium to long term investment perspective," he said.

Incorporated in 1980, Valiant Laboratories is a pharmaceutical ingredient manufacturing company based in Gujarat, India. It majorly focuses on manufacturing Paracetamol and imports the raw material for it, namde as para–amino phenol from China and Cambodia.

Valiant Laboratories has its manufacturing unit located in Palghar, Maharashtra. It has a total installed capacity of 9,000 MT per annum. Unistone Capital was the sole manager for the issue, while Link Intime India was appointed as the registrar to the IPO.

The strong listing can be attributed to the company’s robust financial performance. The paracetamol API industry is expected to clock a 5-7 per cent CAGR between FY23-27, said Prathamesh Masdekar, Research Analyst at StoxBox. "We remain optimistic on the company and recommend investors to hold shares and consider buying on dips for a long-term period," he said.

Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.

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