Supreme Power Equipment IPO Subscribed 262.60 times

About the Supreme Power Equipment Ltd IPO

The stock of Supreme Power Equipment Ltd has a face value of ₹10 per share and it is a book building issue with the price band for the IPO fixed in the range of ₹61 to ₹65 per share. Supreme Power Equipment IPO has only a fresh issue component and no offer for sale (OFS) portion. The fresh issue portion of the IPO is EPS dilutive and also equity dilutive. Supreme Power Equipment Ltd will issue a total of 71,80,000 shares (71.80 lakh shares), which at the upper band IPO price of ₹65 per share aggregates to a fresh fund raising of ₹46.67 crore. Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Fresh offers tend to be EPS and equity dilutive.

Therefore, the total IPO size will also comprise of the issue of 71,80,000 shares (71.80 lakh shares) which at the upper IPO band price of ₹65 per share will aggregate to overall IPO size of ₹46.67 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 9,32,000 shares to Share India Securities Ltd (market maker) to enable them to provide two-way quotes to ensure liquidity and low basis costs post listing. The promoter stake will be diluted post the IPO from 79.37% to 57.54%. The company will use the fresh funds to meet its capex and to fund working capital gaps. Narnolia Financial Services  Ltd will be the lead manager to the issue, and Purva Share Registry India Private Ltd will be the registrar to the issue.

Final subscription status of Supreme Power Equipment Ltd

Here is the subscription status of the Supreme Power Equipment Ltd as at close on 26th December 2023.

As can be seen from the above table, the overall IPO of Supreme Power Equipment Ltd got subscribed an impressive 262.60 times. The HNI / NII portion led the stakes with 489.10 times subscription, followed by the Retail portion at 264.48 times subscription. The QIB portion of the IPO also got a healthy subscription of 88.98 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 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 2,80,000 shares were allocated as market maker portion to Prabhat Financial Services 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 Supreme Power Equipment Ltd, the anchor allocation of 18,70,000 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 43.45% of the issue size to 17.41% of the issue size. The anchor allocation bidding opened on December 20, 2023 and also closed on the same day. A total of 18,70,000 shares were allocated across 4 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹65 per share. The total anchor allocation value was worth ₹12.16 crore.

The anchor allottees included Zeal Global Opportunities Fund (16.90%), Nova Global Opportunities Fund (16.79%), Vikasa India EIF I Fund (49.41%), and Silver Stallion Fund (16.90%). These 4 anchor investors accounted for the entire 100% of the anchor allocation. Out of the anchor shares allocated to investors on December 20, 2023, a lock in of 30 days will be applicable for 50% of the shares (up to February 08, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to May 10, 2024). The allocation of market maker inventory of 12.98% is outside the anchor portion.

How subscription built up for the IPO of Supreme Power Equipment 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 Supreme Power Equipment 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 Supreme Power Equipment Ltd.

• The HNI / NII portion got the best subscription in the Supreme Power Equipment Ltd IPO at 489.10 times and it got 3.50 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 264.48 terms overall and it got 13.68 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 88.98 times overall and it got 1.01 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 262.60 times also got fully subscribed at 7.88 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 14.75X to 489.10X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 38.64X to 264.48X 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 1.05X to 88.98X on the last day of the IPO. Finally, regarding the overall IPO subscription ratio, it also moved from 22.78X to 262.60X on the last day of the IPO.

With the IPO closed for subscription at the end of December 26th, 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 27th December 2023 while the refunds would be initiated on 28th December 2023. The shares of Supreme Power Equipment Ltd (ISIN - INE0QHG01026) would be credited to the demat accounts of eligible shareholders by the close of 28th December 2023 while the stock of Supreme Power Equipment Ltd is expected to be listed on 29th December 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.