EPACK Durable IPO Subscribed at 16.37 times

EPACK Durable IPO has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹218 to ₹230 per share. The final price will be discovered within this band. The IPO of EPACK Durable Ltd will be a combination of a fresh issue and offer for sale. A fresh issue brings fresh funds into the company, but is also EPS and equity dilutive; while OFS is just a transfer of ownership and does not dilute equity or EPS. The fresh issue portion of the IPO of EPACK Durable Ltd comprises the issue of 1,73,91,304 shares (173.91 lakh shares approximately), which at the upper price band of ₹230 per share will translate into a fresh issue size of ₹400 crore.

The offer for sale (OFS) portion of the EPACK Durable IPO comprises the sale of 1,04,37,047 shares (104.37 lakh shares approximately), which at the upper price band of ₹230 per share will translate into an offer for sale (OFS) size of ₹240.05 crore. Out of the 5 members of the promoter group, 4 promoters members will be offering shares in the OFS. In addition, 2 early investors (India Advantage Fund and Dynamic India Fund) will also be offering shares in the OFS. Post IPO, promoter stake will fall from 85.49% to 65.36%. The overall IPO of  EPACK Durable Ltd will, therefore, comprise of a fresh issue and sale of 2,78,28,351 shares (278.28 lakh shares approximately), which at the upper price band of ₹230 per share translates into total IPO size of ₹640.05 crore.

The IPO of EPACK Durable Ltd will be listed on the NSE and BSE on the IPO mainboard. The IPO is a combination of a fresh issue and an offer for sale. The fresh issue proceeds will be used by EPACK Durable Ltd to fund capital expenditure to expand the manufacturing capacity. It will also use part of the proceeds for prepayment or repayment of loans taken. The IPO will be lead managed by Axis Capital, DAM Capital (formerly IDFC Securities), and ICICI 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 third and final day of the IPO while the retail portion got fully subscribed on the first day of the IPO itself. The HNI / NII portion and the overall IPO saw subscription book filling up only on the second day of the IPO. The IPO was kept open for a total period of 3 days. While the retail portion did start off strong, the eventual traction was not too high towards the end. Here is the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 16.37 times subscribed at the close of the third and final day of the IPO on 24th January 2024. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.01 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.17X to 25.50X.
   
• The HNI / NII portion got 0.85 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 8.19X to 28.10X.
   
• Retail portion got 1.24 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 3.99X to 6.29X.
   
• The overall IPO got 0.80 times subscribed at the end of the first day of the IPO. However, on last day of the IPO, overall subscription moved from 3.80X to 16.37X.

Rapid update on the overall IPO response

The IPO saw fairly slow 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 EPACK Durable 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, EPACK Durable Ltd IPO was subscribed 16.37X overall, with best demand coming from the HNI / NII segment, followed by the QIB segment and the Retail segment in that order.

In fact, the institutional QIB 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 modest, 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 of shares to various categories of investors.

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 24th January 2024, out of the 199.78 lakh shares on offer in the IPO, EPACK Durable Ltd saw bids for 3,270.95 lakh shares. This implies an overall subscription of 16.37X at a macro level. The granular break-up of subscriptions was in favour of the HNI / NII investors followed by the QIB 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 18th January 2024, EPACK Durable 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 83,48,504 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹230 per share (including premium of ₹220 per share) which resulted in an overall allocation of ₹192.02 crore. The anchors absorbed 30% of the total issue size of ₹640.05 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 55.85 lakh shares of which it has got bids for 1,424.22 lakh shares at the close of Day-3, implying a subscription ratio of 25.50X 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 EPACK Durable 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 28.10X (getting applications for 1,213.30 lakh shares against the quota of 43.18 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 31.64X while the below ₹10 lakh bid category (S-HNIs) got subscribed 21.01X. This is just in the form of additional 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 6.29X 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 100.75 lakh shares on offer, valid bids were received for 633.43 lakh shares, which included bids for 513.86 lakh shares at the cut-off price. The IPO is priced in the band of (₹218 to ₹230 per share) and has closed for subscription as of the close of Wednesday, 24th January 2024.