Baweja Studios IPO Subscribed 2.62 times

About the Baweja Studios IPO

The stock of Baweja Studios Ltd has a face value of ₹10 per share and it is a book built issue. The price band for the book built issue has been set in the range of ₹170 to ₹180 per share. The final price of the IPO will be decided within this price band. The IPO of Baweja Studios Ltd has a fresh issue component and an offer for sale (OFS) portion as part of the IPO. As part of the fresh issue portion of the IPO, Baweja Studios Ltd will issue a total of 40,00,000 shares (40.00 lakh shares), which at the upper band of the book building band of ₹180 per share aggregates to fresh fund raising of ₹72.00 crore. Additionally, as part of the offer for sale (OFS) portion, promoters of Baweja Studios Ltd will offer 14,00,000 shares (14.00 lakh shares), which at the upper price band of ₹180 per share aggregates to fresh fund raising of ₹25.20 crore. The entire 14 lakh shares as part of the offer for sale (OFS) are being offered by the promoter, Harjaspal Singh Baweja.

Therefore, the overall IPO size will also comprise of the issue and sale of 54,00,000 shares (54.00 lakh shares) which at the upper IPO band price of ₹180 per share will aggregate to overall IPO size of ₹97.20 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 2,88,000 shares. NNM Securities Private Ltd will be the market makers for the SME IPO. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs. Post the IPO, the promoter stake in Baweja Studios Ltd will dilute from 99.99% to 70.70%. The fresh issue funds will be used by the company for meetings its working capital expenses and general corporate expenses. Fedex Securities Private Ltd will be the lead manager to the issue, and Skyline Financial Services Private Ltd will be the registrar. NNM Securities Private Ltd is the market maker.

Final subscription status of Baweja Studios Ltd

Here is the subscription status of the Baweja Studios IPO as at close on 01st February 2024.

As can be seen from the above table, the overall IPO of Baweja Studios Ltd got subscribed just about 2.62 times. The Retail portion led the stakes with 4.20 times subscription, followed by the QIB portion at 2.17 times subscription. The HNI / NII portion of the IPO got a very tepid subscription of 1.08 times. That is a very tepid 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 hardly any traction for the IPO across all the three categories of investors; QIB, retail and HNI / NII 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, QIB and the HNI / NII segments. A total of 2,88,000 shares were allocated as market maker portion to NNM Securities 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.

In the above IPO of Baweja Studios Ltd, the anchor allocation of 3,26,400 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 10.07% of the issue size to 4.03% of the issue size. The anchor allocation bidding opened on January 25th, 2024 and also closed on the same day. A total of 3,26,400 shares were allocated across 2 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹180 per share (which includes face value of ₹10 per share and premium of ₹170 per share).

The total anchor allocation value was worth ₹5.88 crore. The list of 2 anchor investors who got allotted 100% of the anchor portion were; Saint Capital Fund (50.00%), and Nakshatra Stressed Assets Fund (50.00%). These 2 anchor investors accounted for 100% of the overall anchor allocation. Out of the anchor shares allocated to investors on January 25th, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to March 18th, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to June 18th, 2024). The allocation of market maker inventory of 5.33% is outside the anchor portion.

How subscription built up for the IPO of Baweja Studios 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 Baweja Studios Ltd. The IPO was kept open for 4 working days. However, despite that, the response was quite tepid.

Here are the key takeaways from the subscription numbers on a day-wise basis for Baweja Studios Ltd.

• The Retail portion got the best subscription in the Baweja Studios Ltd IPO at 4.20 times and it got 0.59 times subscribed on the first day of the IPO itself.
   
• The QIB portion was behind the HNI / NII portion in terms of subscription at 2.17 times overall and it got 0.00 times subscribed at the end of the first day.
   
• The HNI / NII portion was third in the pecking order in terms of subscription at 1.08 times overall and it got exactly 0.24 times subscribed at the end of the first day.
   
• With the QIB, retail and HNI / NII portion got fully subscribed only on the fourth and final day of the IPO, the retail portion got subscribed on the second day of the IPO. As a result, the overall subscription got filled up on the third day of the IPO. The overall IPO which saw subscription of 2.62 times got subscribed at just 0.39 times at the close of the first day of the IPO itself.
   
• The retail, and HNI / NII portion saw some decent traction on the last day of the IPO. The HNI / NII portion saw the total subscription ratio moving from 0.38X to 1.08X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 2.00X to 4.20X on the last day of the IPO.
   
• The last day traction story was true for QIBs and the overall IPO also. The QIB portion saw the total subscription ratio moving from 0.01X to 2.17X on the last day of the IPO. Finally, regarding the overall IPO subscription ratio, it also moved from 1.12X to 2.62X on the last day of the IPO.

Overall, the IPO of Baweja Studios Ltd just about managed to scrape through and it remains to be seen how the post listing performance stacks up.

Next steps after the closure of the IPO

The issue opened for subscription on 29th January 2024 and closed for subscription on 01st February 2024 (both days inclusive). The basis of allotment will be finalized on 02nd February 2024 and the refunds will be initiated on 05th February 2024. In addition, the demat credits are expected to happen on 05th February 2024 and the stock is scheduled to list on 06th February 2024 on the NSE 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 05th February 2024 under ISIN Number (INE0JFJ01011).