Cello World IPO Subscribed 38.90 times

Cello world IPO opened on 30th October 2023 and closed for subscription on 01st November 2023. Cello World Ltd has a face value of ₹5 per share while the price band for the book building IPO has been set in the range of ₹617 to ₹648. The IPO of Cello World Ltd is entirely an offer for sale, with no fresh issue component. The offer for sale (OFS) portion of the IPO comprises the sale of 2,93,20,987 shares (293.21 lakh shares approximately), which at the upper price band of ₹648 per share will translate into an offer for sale (OFS) size of ₹1,900 crore. The entire offer for sale (OFS is being made by the promoter group; spread across 6 promoter shareholders. Since there is no fresh issue component in the IPO, the overall IPO size will comprise only of the OFS. Thus, the total IPO will also entail the sale of 2,93,20,987 shares (293.21 lakh shares approximately), which at the upper price band of ₹648 per share will translate into a total IPO issue size of ₹1,900 crore.

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 slow for the retail investors. In fact, the QIB portion got fully subscribed only on the last day of the IPO while the HNI / NII portion got subscribed on the second day with the overall IPO also getting subscribed only on the second day. The retail portion of the IPO also got fully subscribed on the second day of the IPO only. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 38.90 times subscribed at the close of the third and final day of the IPO on 01st November 2023. The IPO had been kept open for 3 days in all.

Rapid update on the overall IPO response

The IPO saw fairly tepid flows on Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO. However, the IPO did close with relatively healthy subscription numbers at the close of Day-3. In fact, the IPO of Cello World Ltd got fully subscribed only on the second and penultimate day of the IPO, with none of the categories of investor seeing full subscription on the first day. As per the combined bid details put out by the BSE at the close of Day-3, Cello World Ltd IPO was subscribed 38.90X 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 timid, although it was fully subscribed on Day-2 of the IPO itself. 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 01st November 2023, out of the 220.62 lakh shares on offer in the IPO, Cello World Ltd saw bids for 8,583.15 lakh shares. This implies an overall subscription of 38.90X 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 27th October 2023, Cello World IPO 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 87,49,999 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹648 per share (including premium of ₹643 per share) which resulted in an overall allocation of ₹567 crore. The anchors absorbed 29.84% of the total issue size of ₹1,900 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 65.66 lakh shares of which it has got bids for 7,128.60 lakh shares at the close of Day-3, implying a subscription ratio of 108.57X 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 Cello World 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 24.42X (getting applications for 1,122.15 lakh shares against the quota of 45.95 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 28.58X while the below ₹10 lakh bid category (S-HNIs) got subscribed 16.10X. 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 3.06X at the close of Day-3, showing relatively modest appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 107.21 lakh shares on offer, valid bids were received for 327.72 lakh shares, which included bids for 276.80 lakh shares at the cut-off price. The IPO is priced in the band of (₹617 to ₹648 per share) and has closed for subscription as of the close of Wednesday, 01st November 2023.