Nova Agritech IPO Closing Subscribed at 109.38 times

The stock of Nova AgriTech Ltd has a face value of ₹2 per share and the price band for the book building IPO has been set in the range of ₹39 to ₹41 per share. The final price will be discovered within this band. The IPO of Nova AgriTech Ltd will be a combination of a fresh issue and an offer for sale. The fresh issue portion of the IPO of Nova AgriTech Ltd comprises the issue of 2,73,17,073 shares (273.17 lakh shares approximately), which at the upper price band of ₹41 per share will translate into a fresh issue size of ₹112 crore. The offer for sale (OFS) portion of the IPO of Nova AgriTech Ltd comprises the sale of 77,58,620 shares (77.59 lakh shares approximately), which at the upper price band of ₹41 per share will translate into an offer for sale (OFS) size of ₹31.81 crore. Promoters currently hold 84.27% in the company. None of the promoters or promoter group are selling shares in the IPO. The entire OFS quantity of 77.59 shares is being sold by investor shareholder (Nutalapati Venkata Subbarao), who will sell his entire 11.9% stake in the company.

The promoter stake, post the issue will stand reduced to 59.39%. The overall IPO of  Nova AgriTech Ltd will be a combination of a fresh issue and an offer for sale. The overall issue will, therefore, comprise of the fresh issue and sale of 3,50,75,693 shares (350.76 lakh shares approximately), which at the upper price band of ₹41 per share translates into total IPO size of ₹143.81 crore. The IPO of Nova AgriTech Ltd will be listed on the NSE and the BSE on the IPO mainboard. The fresh issue proceeds of the IPO will be used by Nova AgriTech Ltd to invest in its subsidiary, Nova Agri Sciences to set up a formulation plant, funding capex for expansion and for the working capital needs of the company and its subsidiary. The IPO will be jointly lead managed by Keynote Financial Services and Bajaj Capital ltd. Bigshare Services Private Ltd will be the registrar to the issue.

How subscriptions evolved in the IPO period

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was quite rapid for the retail investors. In fact, the QIB portion got fully subscribed only on the second day of the IPO while the retail portion got fully subscribed on the first day of the IPO itself. The HNI / NII portion and the overall IPO also saw the subscription book filling up on the first day of the IPO itself. The IPO was kept open for a total period of 3 consecutive trading days. While the retail portion did start off strong, the eventual traction was not as high as the HNI / NII portion, but was almost at par with the QIB portion of the IPO. Here is the day-wise progress in IPO subscription of the total available quota. The available quota in this case is net of the anchor allocation of shares, done one working day prior to the opening of the IPO.

As can be seen from the above table, the overall IPO got 109.37 times subscribed at the close of the third and final day of the IPO on 25th January 2024. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.63 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 1.14X to 79.31X.
   
• The HNI / NII portion got 15.37 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 74.24X to 224.08X.
   
• Retail portion got 13.68 times subscribed at the end of the first day of the IPO. However, on the third and final day of the IPO, the subscription moved from 38.16X to 77.12X.
   
• The overall IPO got 10.31 times subscribed at the end of the first day of the IPO. However, on third and final day of the IPO, overall subscription moved from 35.32X to 109.38X.

Rapid update on the overall IPO response

The IPO saw fairly slow response on the Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO, as is normally the case. However, the IPO did close with relatively healthy subscription numbers at the close of Day-3. In fact, the IPO of Nova AgriTech Ltd got fully subscribed on the first day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, Nova AgriTech Ltd IPO was subscribed 109.37X overall, with best demand coming from the HNI / NII segment, followed by the QIB segment and the Retail segment in that order.

In fact, the institutional QIB segment and the HNI / NII segments saw some very good traction on the last day. The HNI portion did do well and a lot of the surge of funding applications and corporate applications did come in on the last day of the IPO. Retail portion was relatively modest, although it was fully subscribed on Day-1 of the IPO itself, but subsequent traction was slower than the others. Firstly, let us look at the details of overall allocation of shares to various categories of investors. It may be noted that in the final allocation of shares, minor variations are normal as part of intra-segment adjustments.

Having understood the allocation of shares across various categories, Let us look at how the subscription data played out for the IPO at an overall level and at a more granular level.

As of close of 25th January 2024, out of the 254.15 lakh shares on offer in the IPO, Nova AgriTech Ltd saw bids for 27,797.43 lakh shares. This implies an overall subscription of 109.38X at a macro level. The granular break-up of subscriptions was in favour of the HNI / NII investors followed by the QIB investors and the Retail investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Data Source: BSE

Subscription status of QIB Portion

On 19th January 2024, Nova AgriTech Ltd completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated through the process of book building. A total of 1,05,22,220 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹41 per share (including premium of ₹39 per share) which resulted in an overall allocation of ₹43.14 crore. The anchors absorbed 30% of the total issue size of ₹143.81 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 71.76 lakh shares of which it has got bids for 5,691.65 lakh shares at the close of Day-3, implying a subscription ratio of 79.31X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Nova AgriTech Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 224.08X (getting applications for 12,260.35 lakh shares against the quota of 54.71 lakh shares). That is a relatively strong response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was visible as the overall HNI / NII portion added to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 222.52X while the below ₹10 lakh bid category (S-HNIs) got subscribed 227.20X. This is just in the form of additional information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed just 77.12X at the close of Day-3, showing relatively strong appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 127.67 lakh shares on offer, valid bids were received for 9,845.42 lakh shares, which included bids for 8,281.19 lakh shares at the cut-off price. The IPO is priced in the band of (₹39 to ₹41 per share) and has closed for subscription as of the close of Thursday, 25th January 2024.