Baba Food Processing IPO Final subscribed 69.44 times

About the Baba Food Processing India IPO

Baba Food Processing India IPO opened for subscription on 03rd November 2023 and closed for subscription on 07th November 2023. The stock of the company has a face value of ₹10 per share and it is a book building issue with the price band for the IPO fixed in the range of ₹72 to ₹76 per share. The final price will be discovered via book building in this band. The IPO of Baba Food Processing India Ltd has only a fresh issue component with no book built portion. As part of the fresh issue portion of the IPO, Baba Food Processing India Ltd will issue a total of 43,42,105 shares (43.42 lakh shares approximately), which at the upper IPO band price of ₹76 per share aggregates to a total fund raising of ₹33 crore. Since there is no offer for sale portion, the total size of the fresh issue will also be the total size of the IPO. Hence the overall IPO size will also comprise of 43,42,105 shares, which at the upper price band of ₹76 per share will aggregate to ₹33 crore.

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹121,600 (1,600 x ₹76 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 3,200 shares and having a minimum lot value of ₹243,200. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. Now, like in any SME IPO, the IPO of Baba Food Processing India Ltd also has a market making portion with an inventory allocation of 2,17,600 shares. The market maker for the issue is Nikunj Stock Brokers Ltd and they will provide two-way quotes to ensure liquidity on the counter and low basis costs, post listing. Post the IPO, the promoter stake will get diluted from 99.99% to 73.42%. The company will invest the fresh funds into 100% subsidiary (Panchakanya Foods) to financing purchase of machinery to make Besan and Sattu. Horizon Management Private Ltd will be the lead manager to the issue, and MAS Services Ltd will be the registrar to the issue.

Final subscription status of Baba Food Processing India Ltd

Here is the subscription status of the Baba Food Processing India IPO as at close on 07th November 2023.

As can be seen from the above table, the overall IPO of Baba Food Processing India Ltd got subscribed an impressive 69.44 times. The QIB portion led the stakes with 147.02 times subscription, followed by the HNI / NII portion at 84.73 times subscription. Even the Retail portion got subscribed an impressive 60.82 times overall. That is a very strong and smart response to an SME IPO, especially if you consider the median subscriptions that similar other SME IPOs have got in the past. The subscription has shown strong traction for the IPO across all categories of investors.

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, the QIB and the HNI / NII segments. A total of 2,17,600 shares were allocated as market maker portion to Nikunj Stock Brokers Ltd, which will act as 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.

The anchor allotment is normally done a day ahead of the IPO opening. In the case of Baba Food Processing India Ltd, although there was a QIB quota allocation, there was no anchor allocation done int his case. Normally, the anchor allocation is carved out of the QIB quota, and in this case, with just 1.85% allocation to QIB investors, the anchor allocation did not really make any sense. The market making portion of 5.03% is independent of the anchor allocation. The anchor portion is generally carved out of the QIB portion and so the QIB quota available to the public will be reduced by the anchor size.

How subscription built up for the IPO of Baba Food Processing India Ltd

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 Baba Food Processing India 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 Baba Food Processing India Ltd.

• The QIB portion got the best subscription in the Baba Food Processing India Ltd IPO at 147.02 times and it got 1.66times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion got the next best subscription in the Baba Food Processing India Ltd IPO at 84.73 times and it got 1.30times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 60.82 terms overall and it got 3.82 times subscribed at the end of the first day.
   
• It was not just the retail and HNI / NII portion getting fully subscribed on the first day of the IPO itself. Even the QIB portion got full book subscribed on the first day of the IPO itself. The overall IOP got subscribed 3.05 times on the first day of the IOP itself, eventually closing with 69.44 times subscription overall.
   
• The QIB, retail and HNI / NII portion saw the best traction on the last day of the IPO followed by the HNI / NII portion and the retail portion. The QIB saw the total subscription ratio moving from 1.98X to 147.02X on the last day of the IPO. The HNI / NII portion saw the total subscription ratio moving from 5.52X to 84.374X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 19.38X to 60.82X on the last day of the IPO.
   
• Just as the QIB portion, HNI / NII portion and the retail portion saw the best incremental traction on the last day of the IPO, even the overall IPO saw smart traction on the last day with the subscription ratio for the overall IPO moving from 15.02X to 69.44X on the last day.

With the IPO closed for subscription at the end of November 07th, 2023, the next piece of action shifts to the finalization of the basis of allotment and later to the listing of the IPO. The basis of allotment will be finalized on 10th November 2023 while the refunds would be initiated on 13th November 2023. The shares of Baba Food Processing India Ltd (ISIN - INE0QW501012) would be credited to the demat accounts of eligible shareholders by the close of 15th November 2023 while the stock of Baba Food Processing India Ltd is expected to be listed on 16th November 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.