HP Adhesives IPO - Subscription Day 1

5paisa Research Team 5paisa Research Team 15th December 2021 - 09:07 pm

The Rs.125.96 crore IPO of HP Adhesives Ltd, consisting of a fresh issue of Rs.113.44 crore and an offer for sale (OFS) of Rs.12.52 crore, saw strong response on Day-1 of the IPO. As per the combined bid details put out by the BSE at the end of Day-1, HP Adhesives Ltd IPO was subscribed 3.48 times overall, with demand coming mainly from the retail segment but marginal demand from the HNI segment and the QIB segment. The issue will close for subscription on Friday, 17th December.

As of close of 15th December, out of the 25.29 lakh shares on offer in the IPO, HP Adhesives Ltd saw bids for 87.96 lakh shares. This implies an overall subscription of 3.48 times. The granular break-up of subscriptions was dominated by the retail investors with limited response from HNIs and nil response from the QIBs. Normally, it is only on the last day of bidding, the NII bids and the QIB bids build up substantial momentum. First day response may not be too relevant for HP Adhesives Ltd.

HP Adhesives Ltd IPO Subscription Day 1

Category	Subscription Status
Qualified Institutional Buyers (QIB)	0.00 Times
Non Institutional Investors (NII)	1.38 Times
Retail Individuals	18.57 Times
Employees	N.A.
Overall	3.48 times

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 14th December, HP Adhesives Ltd did an anchor placement of 20,68,700 shares at the upper end of the price band of Rs.274 to 3 anchor investors raising Rs.56.68 crore, representing 45% of the overall issue size.

The list of QIB anchors included COEUS Global Opportunities Fund (547,500 shares), 3 Sigma Global Fund (966,000 shares) and AG Dynamic Funds Ltd (555,200 shares). The entire anchor issue was spread across these 3 anchor investors only. Anchor investors have a mandatory lock in period of just 1 month.

The QIB portion (net of anchor allocation as explained above) has a quota of 13.79 lakh shares of which it has got bids for Nil shares at the close of Day-1, implying Nil subscription for QIBs at the end of Day-1. However, QIB bids typically get bunched on the last day but the institutional interest in the anchor placement from the three funds shows that there is institutional appetite for the IPO.

HNI / NII Portion

The HNI portion got subscribed 0.38x to 38% (getting applications for 2.60 lakh shares against the quota of 6.90 lakh shares). This is OK for Day-1 but this segment normally sees the maximum response bunched on the last day of the issue. Bulk of the funded applications and corporate applications, come in on the last day of the IPO only.

Retail Individuals

The retail portion was subscribed a relatively robust 18.57 times at the close of Day-1, showing strong retail appetite; as has been the general trend with smaller sized IPOs. It must be noted that retail allocation is just 10% in this IPO.

For retail investors; out of the 4.60 lakh shares on offer, valid bids were received for 85.36 lakh shares, which included bids for 65.40 lakh shares at the cut-off price. The IPO is priced in the band of (Rs.262-Rs.274) and will close for subscription on 17th December 2021.

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