Kaushalya Logistics IPO Subscribed 390.88 times

About the Kaushalya Logistics IPO

Kaushalya Logistics IPO opened for subscription on 29th December 2023 and closes for subscription on 03rd January 2024. The stock of Kaushalya Logistics Ltd has a face value of ₹10 per share and it is a book built issue. The issue price band for the book building IPO is between ₹71 and ₹75 per share. The final price will be discovered within this range. The IPO of Kaushalya Logistics Ltd has a fresh issue component and an offer for sale (OFS) portion. While the fresh issue is EPS dilutive and equity dilutive, OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive.

The fresh issue portion of the Kaushalya Logistics IPO comprises the issue of 33,80,000 shares (33.80 lakh shares), which at the upper IPO price band of ₹75 per share aggregates to a fresh issue size of ₹25.35 crore. The offer for sale (OFS) portion of the IPO will entail the sale of 15,00,000 shares (15.00 lakh shares), which at the upper IPO price band of ₹75 per share is worth ₹11.25 crore. Out of the 15 lakh shares offered under the OFS; promoter Uddhav Poddar will offer 3.75 lakh shares while Bhumika Realty Private Ltd (promoter group company) will offer 11.25 shares. Therefore, the overall IPO will comprise of the issue and sale of 48,80,000 shares which at the upper IPO price band of ₹75 per share would be worth ₹36.60 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 2,44,800 shares. The market maker for the issue is Nikunj Stock Brokers Ltd and they will provide two-way quotes to ensure liquidity and low basis costs. Post the IPO, the promoter stake will stand diluted from 99.99% to 72.98%. The company will use the fresh funds to repay unsecured loans and for working capital needs. Khandwala Securities Ltd will be the lead manager to the issue, and Skyline Financial Services Private Ltd will be the registrar to the issue. The market maker for the IPO of Kaushalya Logistics Ltd is Nikunj Stock Brokers Ltd.

Final subscription status of Kaushalya Logistics Ltd

Here is the subscription status of the Kaushalya Logistics Ltd as at close on 03rd January 2024.

As can be seen from the above table, the overall IPO of Kaushalya Logistics Ltd got subscribed an impressive 390.88 times. The HNI / NII portion led the stakes with 847.88 times subscription, followed by the Retail portion at 375.44 times subscription. The QIB portion of the IPO also got a healthy subscription of 92.62 times. 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 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 2,44,800 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.

In the above IPO of Kaushalya Logistics Ltd, the anchor allocation of 13,34,000 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.45% of the issue size to 20.12% of the issue size. The anchor allocation bidding opened on December 28, 2023 and also closed on the same day. A total of 13,34,000 shares were allocated across 5 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹75 per share (which includes face value of ₹10 per share and premium of ₹65 per share).

The total anchor allocation value was worth ₹10.01 crore. The anchor allottees included Neomile  Growth Fund Series (49.76%), Rajasthan Global Securities Private ltd (10.07%), LRSD Securities Private Ltd (10.07%), Saint Capital Fund (20.02%)and LC Radiance Fund VCC (10.07%). These 5 anchor investors accounted for the entire 00% of the anchor allocation. Out of the anchor shares allocated to investors on December 28, 2023, a lock in of 30 days will be applicable for 50% of the shares (up to February 16, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to May 20, 2024). The allocation of market maker inventory of 5.01% is outside the anchor portion.

How subscription built up for the IPO of Kaushalya Logistics 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 Kaushalya Logistics Ltd. The IPO was kept open for 4 working days.

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

• The HNI / NII portion got the best subscription in the Kaushalya Logistics Ltd IPO at 847.88 times and it got 9.26 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 375.44 times overall and it got 15.40 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 92.62 times overall and it got 2.01 times subscribed at the end of the first day.
   
• While the QIB, retail and HNI / NII portion getting fully subscribed on the first day of the IPO itself, even the overall subscription was filled up on the first day itself. The overall IPO which saw subscription of 390.88 times also got fully subscribed at 10.12 times at the close of the first day of the IPO itself.
   
• 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 209.79X to 847.88X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 195.71X to 375.44X 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 4.55X to 92.62X on the last day of the IPO. Finally, regarding the overall IPO subscription ratio, it also moved from 141.82X to 390.88X on the last day of the IPO.

Overall, the IPO of Kaushalya Logistics Ltd became one of the few SME IPOs in the last one year to have got subscribed more than 300 times and that is a good sign of things to come.

Next steps after the closure of the IPO

With the IPO closed for subscription at the end of January 03rd, 2024, 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 04th January 2024 and the refunds will be initiated on 05th January 2024. In addition, the demat credits are expected to happen on 05th January 2024 and the stock is scheduled to list on 08th January 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 January 2024 under ISIN Number (INE0Q2V01012). The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.