Ramdevbaba Solvent IPO Subscribed 126.21 times

About the Ramdevbaba Solvent IPO

Ramdevbaba Solvent IPO has a face value of ₹10 per share and it is a book built issue. The price for the book building issue is set in the price band of ₹80 to ₹85 per share. Being a book built issue, the final price of the IPO will be discovered in this price band. The IPO of Ramdevbaba Solvent 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 issue portion of the IPO, Ramdevbaba Solvent Ltd will issue a total of 59,13,600 shares (59.14 lakh shares approximately), which at the upper end of the price band at ₹85 per share aggregates to fresh fund raising of ₹50.27 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 59,13,600 shares (59.14 lakh shares approximately) which at the upper end of the price band of ₹85 per share will aggregate to overall IPO size of ₹50.27 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 3,13,600 shares. Choice Equity 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 share will dilute post the IPO from 81.01% to 59.36%. The fresh issue funds will be used by the company for setting up a new manufacturing facility, repayment of outstanding borrowings (in full or in part), and for working capital needs. Choice Capital Advisors Private Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Choice Equity Broking Private Ltd.

Read more about Ramdevbaba Solvent IPO

Final subscription status of Ramdevbaba Solvent IPO

Here is the subscription status of the Ramdevbaba Solvent IPO as at close of trading on 18th April 2024.

As can be seen from the above table, the overall IPO of Ramdevbaba Solvent Ltd got subscribed an impressive 126.21 times. The HNI / NII portion led the stakes with 314.46 times subscription, followed by the Retail portion at 79.96 times subscription. The QIB portion of the IPO also got a healthy subscription of 65.95 times. That is a very relatively strong and robust 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; although it must be said that retail subscriptions were tad below median.

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 3,13,600 shares were allocated as market maker portion to Choice Equity Broking 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.

Data Source: NSE

In the above IPO of Ramdevbaba Solvent Ltd, the anchor allocation of 3,13,600 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.35% of the issue size to 18.94% of the issue size. The anchor allocation bidding opened on April 12th, 2024 and also closed on the same day. A total of 16,80,000 shares were allocated across 7 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹85 per share (which includes face value of ₹10 per share and premium of ₹75 per share).

The total anchor allocation value was worth ₹14.28 crore. Out of the 7 anchor investors who got allotted 100% of the anchor portion; 5 of them got allocated a minimum of 14% in the anchor portion. These 5 anchor investors were; Minerva Emerging Opportunities Fund (28.19%), Nakshatra Stressed Assets Fund (14.29%), Steptrade Revolution Fund (14.10%), Rajasthan Global Securities Private Ltd (14.10%), and Milky Investment & Trading Company (14.10%). These 5 anchor investors accounted for 84.76% of the overall anchor allocation. Out of the anchor shares allocated to investors on April 12th, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to May 19th, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to July 18th, 2024). The allocation of market maker inventory of 5.30% is outside the anchor portion.

How subscription built up for the Ramdevbaba Solvent IPO?

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 Ramdevbaba Solvent 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 Ramdevbaba Solvent Ltd as of the close of the IPO on 29th February 2024.

• The HNI / NII portion got the best subscription in the Ramdevbaba Solvent Ltd IPO at 314.46 times and it got 8.18 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 79.96 times overall and it got 5.80 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 65.95 times overall and it got 0.00 times subscribed at the end of the first day.
   
• While the Retail portion and the HNI / NII portion got fully subscribed on the first day of the IPO itself, the QIB portion got fully subscribed only on the third and final day of the IPO. However, the overall IPO also got fully subscribed on the first day of the IPO itself.
   
• The overall IPO which saw subscription of 126.21 times got subscribed at 4.68 times at the close of the first day of the IPO. Let us now turn to how the last day traction on the IPO subscription played out across categories.
   
• Let us start with the HNI / NII portion. The HNI / NII portion saw the total subscription ratio moving from 14.69X to 314.46X on the last day of the IPO. That is a substantial amount of traction on the last day.
   
• Like the HNI / NII portion, even the retail portion saw very good traction on the last day of the IPO. On the final day of the IPO, the total subscription ratio for retail investors moved from 13.74X to 79.96X on the last day of the IPO.
   
• The strong last day traction was the case in the QIB investors also, which is natural as they see most of the flows on the last day. The QIB portion saw the total subscription ratio moving from 0.02X to 65.95X on the last day of the IPO.
   
• Finally, regarding the overall IPO subscription ratio, the move was obviously strongest on the last day of the 3-day IPO. The overall subscription moved from 10.06X to 126.21X on the last day of the IPO.

Overall, the IPO of Ramdevbaba Solvent Ltd saw above median subscription in the SME IPO.

Next steps after the closure of the IPO

The issue opened for subscription on 15th April 2024 and closed for subscription on 18th April 2024 (both days inclusive). The basis of allotment will be finalized on 19th April 2024 and the refunds will be initiated on 22nd April 2024. In addition, the demat credits are also expected to happen on 22nd April 2024 and the stock is scheduled to list on 23rd April 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 22nd April 2024 under ISIN Number (INE0RJH01010).