‘Beaten-Down’ IPO Stock Gains Momentum from All-Time Low!

  • Stock Market Analysis
  • Editors Pick

One of the most beaten-down IPO counters in the recent past is Supriya Lifescience Ltd (NS: SPRL ). It is a pharmaceutical company with a market capitalization of INR 1,631 crores and trades at a P/E ratio of 10.75, compared to the sector’s average of 33.94.

The stock had been tumbling since it marked its debut on 28 December 2021 and after a few weeks of up move, it has only been falling to new lows. It has seen a one-way fall since its listing on the Indian bourses as investors kept on liquidating their holdings, despite a stellar response to the IPO, with the issue getting subscribed over 72 times.

Image Description: Daily chart of Supriya Lifesciences with RSI at the bottom

Image Source: Investing.com

Little did investors know that the hype would soon fade and they would eventually look for exiting the stock to curb their losses, as what happened with most of the last year’s IPOs. After plunging over 70% from an all-time high of INR 601.9 to an all-time low of INR 179.1, marked a couple of sessions ago, the stock is finally showing some signs of a reversal which could provide a good opportunity for bulls.

The stock has formed a bullish divergence at the very bottom of the daily chart which is making it a good candidate for a counter-trend rally from here. Also, the oversold level through which the stock is coming out is further adding fuel to the upside move.

Apart from this, the volume pick-up at the lows is worth noting. There has been a sudden spurt in the daily volume of the stock and it clocked a figure of 1.73 million shares on Friday which is the highest one-day volume since July 2021. The 10-day average volume which remained at around 199K jumped on 14 February 2023 by around 160% to 517K by today’s closing. This volume activity along with the price rise, as the stock surged 11.1% off lows is painting a bullish picture.

The best part about this counter is its extreme oversold zone which is providing a good risk-to-reward opportunity on the long side. For risk management, a stop-loss below INR 179 can be placed, while traders can sit tight for a level of INR 260, at a minimum.

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