Mandeep Auto Industries IPO Subscribed 77.23 Times

About the Mandeep Auto Industries IPO

The stock of Mandeep Auto Industries Ltd has a face value of ₹10 per share and it is a fixed price issue. The fixed price for issue is set at ₹67 per share. Being a fixed price issue, the question of price discovery does not arise. The IPO of Mandeep Auto Industries Ltd has only a fresh issue component and no offer for sale (OFS) portion. While 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, Mandeep Auto Industries Ltd will issue a total of 37,68,000 shares (37.68 lakh shares), which at the fixed IPO price of ₹67 per share aggregates to fresh fund raising of ₹25.25 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 37,68,000 shares (37.68 lakh shares) which at the fixed IPO price of ₹67 per share will aggregate to overall IPO size of ₹25.25 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,90,000 shares. Aftertrade Share Broking 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 99.97%. However, post the fresh issue of shares, the promoter equity holding share will get diluted to 63.53%. The fresh issue funds will be used by the company towards expansion of existing manufacturing facility at Faridabad, including civil construction and purchase of plant and machinery. The funds will also be used for repayment of loans and working capital needs. Jawa Capital Services Private Ltd will be the lead manager to the issue, and Cameo Corporate Services Ltd will be the registrar to the issue. The market maker for the issue is Aftertrade Share Broking Private Ltd. The IPO of Mandeep Auto Industries Ltd will be listed on the SME IPO segment of the NSE.

Final subscription status of Mandeep Auto Industries IPO

Here is subscription status of Mandeep Auto Industries IPO at close on 15th May 2024.

As can be seen from the above table, the overall IPO of Mandeep Auto Industries Ltd got subscribed an impressive 77.23 times. The Retail investor portion led the stakes with 90.57 times subscription, followed by the HNI / NII portion at 61.54 times subscription. There was no dedicated QIB allocation in this IPO. That is an extremely robust response to an SME IPO, especially if you consider the median subscriptions that similar other SME IPOs have got in the past. Also, in the current volatile market conditions, it does come across as an outstanding performance. The subscription saw strong 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 1,90,000 shares were allocated as market maker portion to Aftertrade Broking Private 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 Mandeep Auto Industries Ltd, there is no dedicated QIB allocation in the IPO. The anchor allocation to the anchor investors is normally carved 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 5.04% 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 Mandeep Auto Industries IPO?

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

• The Retail portion got the best subscription in the Mandeep Auto Industries Ltd IPO at 90.57 times and it got 1.57 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the Retail portion in terms of subscription at 61.54 times overall and it got 0.26 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 second day. Hence, even the overall IPO subscription saw full book only on the second day of the IPO.
   
• The overall IPO, which saw subscription of 77.23 times at close, got fully subscribed at only 0.92 times at the close of the first day.
   
• The 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 3.02X to 61.54X on the third and final day of the IPO.
   
• Like the HNI / NII portion, even the Retail portion saw outstanding traction on the last day of the IPO. In fact, the retail subscription ratio moved from 12.84X to 90.57X on the last day of the IPO.
   
• What about the Overall IPO. The last day story was true for the overall IPO also. On the third and final day of the IPO, the subscription ratio overall moved from 7.94X to 77.23X on the last day of the IPO.

It is not just that the final subscription was strong, even the journey was very robust.

Next steps in the IPO process

The issue opened for subscription on 13th May 2024 and closed for subscription on 15th April 2024 (both days inclusive). The basis of allotment will be finalized on 16th May 2024 and the refunds will be initiated on 17th May 2024. In addition, the demat credits are also expected to happen on 17th May 2024 and the stock is scheduled to list on 21st May 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 17th May 2024 under ISIN Number (INE0R3T01013).