Indifra IPO Final Subscribed 7.21 times

About the Indifra Ltd IPO

The stock of Indifra IPO has a face value of ₹10 per share and it is a fixed price issue. The issue price band for the IPO has been fixed at ₹65 per share. Being a fixed price issue, there is no question of price discovery in this case. Indifra IPO has only a fresh issue component and no offer for sale (OFS) portion. It must be remembered that 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 portion of the IPO, Indifra Ltd will issue a total of 21,60,000 shares (21.60 lakh shares), which at the fixed IPO price of ₹65 per share aggregates to a fresh fund raising of ₹14.04 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 total IPO size will also comprise of the issue of 21,60,000 shares (21.60 lakh shares) which at the fixed IPO price of ₹65 per share will aggregate to overall IPO size of ₹14.04 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,08,000 shares. The market maker for the issue is Spread X Securities Private Ltd and they will provide two-way quotes to ensure liquidity and low basis costs on the counter post listing. The company has been promoted by Abhishek Sandeepkumar Agrawal and Sandeepkumar Vishwanath Agrawal HUF.

The promoter holding in the company currently stands at 96.00%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 67.55%. The fresh issue funds will be used by the company for meeting its working cap funding needs. Part of the monies raised will also go towards meeting the general corporate expenses of the company. Beeline Capital Advisors Private Ltd will be the lead manager to the issue, and KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is Spread X Securities Private Ltd.

Final subscription status of Indifra Ltd

Here is subscription status of Indifra Ltd at close on 26th December 2023.

As can be seen from the above table, the overall IPO of Indifra Ltd got subscribed a rather tepid 7.21 times. The retail portion led the stakes with 12.07 times subscription, followed by the HNI / NII portion at 2.34 times subscription. There was no dedicated QIB allocation in this IPO. That is a very tepid and modest 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 seen modest traction for the IPO across both the categories of investors; retail and HNI / NII investors.

Allocation quota for various categories

The issue was open for retail investors and the HNI / NII investors. There was a broad quota designed for each of the segments viz. the retail, and the HNI / NII segments. A total of 1,08,000 shares were allocated as market maker portion to Spread X Securities 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.

In the above IPO of Indifra Ltd, there is no QIB allocation in the IPO. The anchor allocation to the anchor investors is normally done out of this QIB allocation and hence the company has not done any anchor allocation in the IPO. Normally, the anchor is done to institutional investors, which gives confidence and assurance to the retail shareholders about the institutional interest in the stock The anchor allocation is normally adjusted and deducted from the QIB quota and only the net number of shares is available for public issue under the QIB portion.

However, in this case, there is neither any QIB quota, nor any anchor allocation to investors ahead of the IPO. Normally, the anchor portion bidding is done on the day before the IPO opens and such anchor investments are subjected to lock in at two levels. Half the anchor allocation is locked in for 30 days while the balance anchor allocation shares are locked in for a period of 90 days. The allocation of market maker inventory of 5.00% is outside the anchor portion. The market making portion is more towards ensuring liquidity post listing and ensuring low basis spreads on the stock.

How subscription built up for the IPO of Indifra Ltd

The oversubscription of the IPO was dominated by the retail investors followed by the HNI / NII category in that order. The table below captures the day-wise progression of the subscription status of Indifra 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 Indifra Ltd.

• The retail portion got the best subscription in the Indifra IPO at 12.07 times and it got 1.23 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the retail portion in terms of subscription at 2.34 terms overall and it got 0.25 times subscribed at the end of the first day.
   
• While the retail portion got fully subscribed on the first day of the IPO itself, the HNI / NII portion got fully subscribed only on the last day of the IPO. The overall subscription was filled up on the second day itself. The overall IPO which saw subscription of 7.21 times also got subscribed at 0.74 times at the close of the first day of the IPO.
   
• The retail, and HNI / NII portion saw the best traction on the last day of the IPO. The HNI / NII portion saw the total subscription ratio moving from 0.31X to 2.34X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 3.39X to 12.07X on the last day of the IPO.
   
• The last day traction story was true regarding the overall IPO subscription ratio also. The subscription ratio overall moved from 1.85X to 7.21X on the last day of the IPO.

With the IPO closed for subscription at the end of December 26th, 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 27th December 2023 while the refunds would be initiated on 28th December 2023. The shares of Indifra Ltd (ISIN - INE0PS301014) would be credited to the demat accounts of eligible shareholders by the close of 28th December 2023 while the stock of Indifra Ltd is expected to be listed on 29th December 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.