Shree OSFM E-Mobility IPO subscribed 8.52 times

About Shree OSFM E-Mobility IPO

Shree OSFM E-Mobility IPO opened for subscription on 14th December 2023 and closes for subscription on 18th December 2023. The stock of Shree OSFM E-Mobility Ltd has a face value of ₹10 per share and it is a fixed price issue. The issue price for the IPO has been fixed at ₹65 per share. The IPO of Shree OSFM E-Mobility Ltd has only a fresh issue component to the IPO with no book built portion. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive. The minimum lot size for the IPO investment will be 2,000 shares. Thus, retail investors can invest a minimum of ₹130,000 (2,000 x ₹65 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 4,000 shares and having a minimum lot value of ₹260,000. As part of the fresh portion of the IPO, Shree OSFM E-Mobility Ltd will issue 37,84,000 shares (37.84 lakh shares), which at the fixed IPO price of ₹65 per share aggregates to a total fund raising of ₹24.60 crore.

Since there is no offer for sale portion, the total size of the fresh issue will also be the total size of the IPO. Hence the total IPO size will also comprise of 37.84 lakh shares, which at the fixed IPO price of ₹65 per share will aggregate to ₹24.60 crore. Like any SME IPO, Shree OSFM E-Mobility Ltd also has a market making portion with inventory allocation of 2,00,000 shares. The market maker for the issue is BHH Securities Private Ltd and they will provide two-way quotes to ensure liquidity on the counter post listing and low basis costs. The promoter holding in the company will dilute from 76.02% to 55.88% post the IPO. The fresh funds will be used by the company to purchase of passenger vehicles and for funding the working capital gaps. First Overseas Capital Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue.

Final subscription status of Shree OSFM E-Mobility IPO

Here is subscription status of Shree OSFM E-Mobility IPO at close on 18th December 2023.

As can be seen from the above table, the overall IPO of Shree OSFM E-Mobility Ltd got subscribed a modest 8.52 times. The retail portion led the stakes with 9.30 times subscription, followed by the HNI / NII portion at 6.82 times subscription. There was no dedicated QIB allocation in this IPO. That is a rather modest and tepid 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 very limited 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 2,00,000 shares were allocated as market maker portion to BHH 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 Shree OSFM E-Mobility 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 allocation 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 5.28% 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 Shree OSFM E-Mobility IPO?

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 Shree OSFM E-Mobility 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 Shree OSFM E-Mobility Ltd.

• The retail portion got the best subscription in the Shree OSFM E-Mobility Ltd IPO at 9.30 times and it got 1.82 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the retail portion in terms of subscription at 6.82 terms overall and it got 1.67 times subscribed at the end of the first day.
   
• While the retail and HNI / NII portion got 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 8.52 times also got fully subscribed at 2.18 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 2.16X to 6.82X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 3.99X to 9.30X 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 3.50X to 8.52X on the last day of the IPO.

With the IPO closed for subscription at the end of December 18th, 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 19th December 2023 while the refunds would be initiated on 20th December 2023. The shares of Shree OSFM E-Mobility Ltd (ISIN - INE02S501018) would be credited to the demat accounts of eligible shareholders by the close of 20th December 2023 while the stock of Shree OSFM E-Mobility Ltd is expected to be listed on 21st December 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.