Classic Electrodes IPO Listing: Stock Lists at 14.94% Premium on NSE SME

Classic Electrodes IPO Listing: Strong Debut Followed by Market Correction — What Investors Need to Know

Classic Electrodes Limited, a prominent manufacturer in the welding consumables sector, recently entered the stock market with its Initial Public Offering (IPO) aimed at raising ₹41.51 crore.

The IPO was open for subscription between August 22 and August 26, 2025, and witnessed an exceptional response from investors across categories, signaling strong confidence in the company’s business model and growth prospects.

This report takes a deep dive into the IPO subscription details, listing performance, financials, and future outlook of Classic Electrodes.

IPO Subscription: Overwhelming Investor Enthusiasm

The IPO of Classic Electrodes was subscribed an astonishing 179.97 times overall, an indicator of the significant demand from various investor segments. Breaking down the numbers:

• Qualified Institutional Buyers (QIBs): The institutional portion was subscribed 84.88 times, excluding the anchor investor allotments. Institutional investors such as mutual funds, insurance companies, and other large entities found the company’s prospects attractive.
• Non-Institutional Investors (NII): This segment exhibited extraordinary enthusiasm with a subscription rate of 356.75 times, reflecting robust demand from high net worth individuals and other non-retail investors.
• Retail Investors: The retail category, which typically consists of individual investors, subscribed 158.44 times, showing that the company captured the interest of everyday investors as well.

The issue comprised 47,71,200 equity shares, each with a face value of ₹10, priced at ₹87 per share. The strong subscription numbers suggest investors’ confidence in Classic Electrodes’ market position and growth potential.

Listing Day Performance: Initial Gains Tempered by Market Volatility

On the day of its listing on the NSE SME platform, Classic Electrodes’ shares opened at ₹100, a 14.94% premium to the IPO price.

This initial surge delighted early investors, reflecting positive market sentiment and expectations of the company’s future growth trajectory.

However, this enthusiasm faced immediate pressure as the shares corrected to close at ₹95 by the end of the first trading day.

Though this was a decline from the day’s high, the closing price still represented a healthy 9.19% gain over the IPO issue price, ensuring that IPO investors ended the day in profit.

Such price corrections after an initial spike are common, particularly in the SME segment, where liquidity and market depth can cause sharper price fluctuations.

Market analysts suggest that while the initial listing premium is encouraging, investors should watch the stock closely in the coming weeks to gauge sustained momentum.

Strategic Utilization of IPO Proceeds: Growth and Debt Management

Classic Electrodes plans to use the funds raised from the IPO strategically to strengthen its operational capacity and financial health. Here’s a breakdown of the intended use of proceeds:

• Expansion of Manufacturing Capacity: ₹1.47 crore will be directed toward acquiring new plant and machinery. This investment is crucial for scaling up production capabilities, improving efficiency, and meeting growing demand in both domestic and international markets.
• Debt Reduction: ₹10 crore will be utilized to reduce existing debt. The company has seen a steady rise in borrowings in recent years, and this move will help improve its balance sheet, reduce interest expenses, and enhance financial flexibility.
• Working Capital Requirements: ₹16.60 crore will be allocated to meet working capital needs. Adequate working capital is essential for day-to-day operations, including procurement of raw materials, inventory management, and smooth supply chain functioning.
• General Corporate Purposes: The remaining amount will be reserved for general corporate purposes, which may include marketing, business development, and other strategic initiatives.

This balanced approach towards growth and debt management underscores Classic Electrodes’ commitment to sustainable development.

About Classic Electrodes: Established Player in Welding Consumables

Founded in 1997 and headquartered in Kolkata, Classic Electrodes has carved a niche in the welding consumables industry.

The company manufactures a wide range of products including mild steel electrodes, stainless steel electrodes, cast iron electrodes, deep penetration electrodes, and MIG wires.

These products find applications across multiple industries such as construction, infrastructure, automotive, and manufacturing.

The company’s manufacturing footprint consists of two active plants: one in Dhulagarh, West Bengal, and the other in Jhajjar, Haryana.

Classic Electrodes had a third manufacturing unit in Bahadurgarh, Haryana, which was closed in FY 2024 as part of a strategic realignment to optimize operational efficiency.

Classic Electrodes serves a diversified customer base both within India and internationally, enhancing its revenue streams and reducing dependency on any single market.

Financial Health and Growth Trajectory

Classic Electrodes has shown impressive financial growth over the last few years:

• Profit Growth: The company’s net profit grew steadily from ₹1.49 crore in FY 2022 to ₹2.08 crore in FY 2023, and then made a significant jump to ₹12.30 crore in FY 2024. This robust growth reflects the company’s operational efficiency and increasing market share.
• Revenue Expansion: The total income of Classic Electrodes increased at a compound annual growth rate (CAGR) of over 19% to reach ₹194.41 crore in FY 2024, demonstrating strong demand and effective scaling of business operations.
• Latest Financials: In the first 11 months of FY 2025, the company posted a net profit of ₹9.57 crore on revenue of ₹187.90 crore, indicating continued positive momentum.

However, alongside this growth, the company’s debt levels have also increased, raising some concerns:

• Debt rose from ₹40.21 crore in FY 2022 to ₹44.11 crore in FY 2023, ₹46.73 crore in FY 2024, and further to ₹53.50 crore by February 2025.
• The rising debt emphasizes the importance of the company’s plan to use IPO proceeds to deleverage and improve financial stability.

Industry Outlook and Growth Drivers

The welding consumables industry in India is expected to benefit from a resurgence in infrastructure projects, manufacturing growth, and rising industrial activity.

As India continues to invest heavily in infrastructure development, construction, and automotive sectors, demand for welding electrodes and wires is projected to rise.

Classic Electrodes’ focus on quality products, along with its expanding manufacturing base and export capabilities, positions it well to capture this growth opportunity.

Additionally, technological advancements and innovations in welding processes create room for product diversification and premium offerings, which can further drive the company’s revenue growth.

Risks and Considerations

While Classic Electrodes has demonstrated strong fundamentals, potential investors should keep certain risks in mind:

• Market Volatility: The stock’s performance on the SME exchange can be volatile, influenced by market sentiment and liquidity conditions.
• Debt Levels: Although the company plans to reduce debt, any delay or inability to manage borrowings efficiently could impact profitability.
• Operational Risks: The closure of the Bahadurgarh plant in FY 2024 suggests operational restructuring, which can temporarily impact production and sales.
• Competition: The welding consumables market is competitive, with both domestic and international players. Maintaining market share will require continuous innovation and cost management.

Final Thoughts: A Promising IPO with Cautious Optimism

Classic Electrodes’ IPO and listing have generated significant interest, reflecting strong investor confidence in the company’s business model and growth prospects.

The initial listing gains, although moderated by a market correction, are a positive signal.

With its clear plan to deploy funds for capacity expansion and debt reduction, Classic Electrodes is well-positioned to capitalize on the growing demand for welding consumables.

However, investors should monitor the company’s debt management and market performance closely over the coming months.

In summary, Classic Electrodes presents an attractive growth story in a niche industrial segment, backed by solid financial performance and strategic planning.

For investors willing to accept the risks associated with SME stocks, it offers an opportunity to participate in the evolving Indian industrial landscape.