Azad Engineering IPO Final Subscription at 80.60 times

Azad Engineering IPO has a face value of ₹2 per share and the price band for the book building IPO has been set in the range of ₹499 to ₹524 per share. The final price will be discovered within this band. Azad Engineering IPO will be a combination of a fresh issue and an offer for sale (OFS). The fresh issue portion of the IPO of Azad Engineering Ltd comprises the issue of 45,80,153 shares (45.80 lakh shares approximately), which at the upper price band of ₹524 per share will translate into a fresh issue size of ₹240.00 crore. The offer for sale portion of the IPO of Azad Engineering Ltd comprises the sale of 95,41,985 shares (95.42 lakh shares approximately), which at the upper price band of ₹524 per share will translate into a total OFS size of ₹500.00 crore.

Therefore, the overall IPO of Azad Engineering Ltd will comprise of the issue and sale of 1,41,22,138 shares (141.22 lakh shares approximately), which at the upper price band of ₹524 per share translates into total IPO size of ₹740 crore. The stock of Azad Engineering Ltd will be listed on the NSE and the BSE. Fresh issue proceeds will be used to fund capital expenditure (CAPEX) and to repay / prepay outstanding loans of the company. The IPO will be lead managed by Axis Capital, ICICI Securities, SBI Capital Markets and Anand Rathi Securities. KFIN Technologies 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 and the HNI / NII portion got fully subscribed on the first day of the IPO itself. The overall IPO saw subscription book filling up on the first day of the IPO itself. The IPO was kept open for a total period of 3 days and here is the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 80.60 times subscribed at the close of the third and final day of the IPO on 22nd December 2023. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.05 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 1.53X to 179.66X.
   
• The HNI / NII portion got 6.38 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 24.36X to 87.55X.
   
• Retail portion got 4.23 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 11.76X to 23.71X.
   
• The overall IPO got 3.51 times subscribed at the end of the first day of the IPO. However, on last day of the IPO, overall subscription moved from 11.59X to 80.60X.

Rapid update on the overall IPO response

The IPO saw fairly strong 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 Azad Engineering Ltd got fully subscribed on the second day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Azad Engineering Ltd IPO was subscribed 80.60X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the Retail segment in that order.

In fact, the institutional 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 strong, 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.

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 22nd December 2023, out of the 101.23 lakh shares on offer in the IPO, Azad Engineering Ltd saw bids for 8,158.60 lakh shares. This implies an overall subscription of 80.60X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII 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 December 2023, Azad Engineering 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 42,13,731 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹524 per share (including premium of ₹522 per share) which resulted in an overall allocation of ₹220.80 crore. The anchors absorbed 30% of the total issue size of ₹740 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 28.09 lakh shares of which it has got bids for 5,046.39 lakh shares at the close of Day-3, implying a subscription ratio of 179.66X 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 Azad Engineering 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 87.55X (getting applications for 1,899.88 lakh shares against the quota of 21.70 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 90.58X while the below ₹10 lakh bid category (S-HNIs) got subscribed 81.48X. This is just for 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 23.71X 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 50.64 lakh shares on offer, valid bids were received for 1,200.56 lakh shares, which included bids for 1,063.12 lakh shares at the cut-off price. The IPO is priced in the band of (₹499 to ₹524 per share) and has closed for subscription as of the close of Friday, 22nd December 2023.