Aztec Fluids IPO Subscribed 218.38 times

About the Aztec Fluids and Machinery IPO

The stock of Aztec Fluids and Machinery IPO has a face value of ₹10 per share and it is a book built issue. The book building price band has been set in the range of ₹63 to ₹67 per share. The final price of the IPO will be discovered in this range. The IPO of Aztec Fluids and Machinery Ltd has only a fresh issue component and no offer for sale (OFS) portion. While the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive. As part of the fresh issue portion of the IPO, Aztec Fluids and Machinery Ltd will issue a total of 36,00,000 shares (36.00 lakh shares), which at the upper IPO band price of ₹67 per share aggregates to fresh fund raising of ₹24.12 crore. Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Therefore, the overall IPO size will also comprise of the issue of 36,00,000 shares (36.00 lakh shares approximately) which at the upper IPO band price of ₹67 per share will aggregate to overall IPO size of ₹24.12 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,82,000 shares. Hem Finlease Private Ltd will be the market maker to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 73.53%. The fresh issue funds will be used by the company towards funding of the proposed acquisition of Jet Inks Private Ltd and for repayment of certain borrowings. Hem Securities Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Hem Finlease Private Ltd. The IPO of Aztec Fluids and Machinery Ltd will be listed on the SME IPO segment of the BSE.

Final subscription status of Aztec Fluids and Machinery IPO

Here is the subscription status of the Aztec Fluids and Machinery IPO at the close of 14th May 2024.

As can be seen from the above table, the overall BSE-SME IPO of Aztec Fluids and Machinery Ltd got subscribed an impressive 218.38 times. The HNI / NII portion led the stakes with 341.94 times subscription, followed by the Retail portion at 228.43 times subscription. The QIB portion of the IPO also got a healthy subscription of 107.93 times. That is a very strong and robust response to an SME IPO, especially if you consider the median subscriptions that similar other BSE-SME IPOs have got in the past. The subscription has shown strong traction for the IPO across all the three categories of investors; QIB, retail and HNI / NII investors; with all of them well above the median figures.

Allocation quota for various categories

The issue was open for QIBs, retail investors and the HNI / NII investors. There was a broad quota designed for each of the segments viz. the retail, QIB and the HNI / NII segments. A total of 1,82,000 shares were allocated as market maker portion to Hem Finlease Private Ltd, which will act as the market maker inventory to provide bid-ask liquidity on the counter post listing. Market maker action not only improves liquidity in the counter but also reduces the basis risk. The table below captures the allocation reservation done for each of the categories out of the total number of shares offered in the IPO.

Data Source: BSE

In the above IPO of Aztec Fluids and Machinery Ltd, the anchor allocation of 10,22,000 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.39% of the issue size to 19.00% of the issue size. The anchor allocation bidding opened on May 09th, 2024 and also closed on the same day. A total of 10,22,000 shares were allocated across 6 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹67 per share (which includes face value of ₹10 per share and premium of ₹57 per share).

The total anchor allocation value was worth ₹6.85 crore. The 5 anchor investors who got allotted the full 100% of the anchor portion included; Finavenue Capital Trust (29.35%), Resonance Opportunities Fund (25.63%), AG Dynamics Fund (15.66%), IMAP India Capital Investment Fund (14.68%), and Visionary Value Fund (14.68%). These 5 anchor investors accounted for 100% of the overall anchor allocation. Out of the anchor shares allocated to investors on May 09th, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to June 14th, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to August 13th, 2024). The allocation of market maker inventory of 5.06% is outside the anchor portion.

How subscription built up for the IPO of Aztec Fluids and Machinery IPO?

The oversubscription of the IPO was dominated by the HNI / NII followed by the Retail category and the QIB category in that order. The table below captures the day-wise progression of the subscription status of Aztec Fluids and Machinery Ltd. The IPO was kept open for 3 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for Aztec Fluids and Machinery Ltd as of the close of the IPO on 14th May 2024.

• The HNI / NII portion got the best subscription in the Aztec Fluids and Machinery Ltd IPO at 341.94 times and it got 3.69 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 228.43 times overall and it got 5.35 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 107.93 times overall and it got 1.75 times subscribed at the end of the first day.
   
• With the Retail portion, HNI / NII portion and the QIB portion getting fully subscribed on the first day of the IPO itself, the overall IPO also got fully subscribed on Day-1 itself.
   
• The overall IPO which saw subscription of 218.38 times got subscribed at 3.97 times at the close of the first day of the IPO. Let us now turn to how the last day traction on the IPO subscription played out across categories.
   
• Let us start with the HNI / NII portion. The HNI / NII portion saw the total subscription ratio moving from 19.86X to 341.94X on the last day of the IPO. That is a substantial amount of traction on the last day.
   
• Like the HNI / NII portion, even the retail portion saw very good traction on the last day of the IPO. On the final day of the IPO, the total subscription ratio for retail investors moved from 31.41X to 228.43X on the last day of the IPO.
   
• The strong last day traction was the case in the QIB investors also, which is natural as they see most of the flows on the last day. The QIB portion saw the total subscription ratio moving from 2.85X to 107.93X on the last day of the IPO.
   
• Finally, regarding the overall IPO subscription ratio, the move was obviously strongest on the last day of the 3-day IPO. The overall subscription moved from 20.78X to 218.38X on the last day of the IPO.

Overall, the IPO of Aztec Fluids and Machinery Ltd saw above-median subscription in the BSE-SME IPO.

Next steps after the closure of the IPO

The issue opened for subscription on 10th May 2024 and closed for subscription on 14th May 2024. The basis of allotment will be finalized on 15th May 2024 and the refunds will be initiated on 16th May. In addition, the demat credits are also expected to happen on 16th May 2024 and the stock is scheduled to list on 17th May 2024 on the BSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated. The demat credits to the demat account to the extent of allotment will happen by the close of 16th May 2024 under ISIN Number (INE0SCB01016).