Gopal Snacks IPO (Gopal Namkeen) Subscribed 9.02 times

About Gopal Snacks IPO (Gopal Namkeen)

Gopal Snacks IPO (Gopal Namkeen) has a face value of ₹1 per share and the price band for the book building IPO has been set in the range of ₹381 to ₹401 per share. The IPO of Gopal Snacks Ltd (Gopal Namkeen) will be entirely an offer for sale (OFS) with no fresh issue component in the IPO. As you would be aware, a fresh issue tends to bring in fresh funds into the company, but is also EPS and equity dilutive. On the other hand, OFS is just a transfer of ownership. The offer for sale (OFS) portion of the IPO of Gopal Snacks Ltd (Gopal Namkeen) comprises the sale / offer of 1,62,09,476 shares (162.09 lakh shares approximately), which at the upper price band of ₹401 per share will translate into a fresh issue size of ₹650 crore.

Out of the OFS size of 162.09 lakh shares, two promoter shareholders and one investor shareholder will sell the shares to the public. While the total capital of the company remains the same, the promoter stake gets diluted in the company. Since there is no fresh issue, the OFS portion will also double up as the overall size of the IPO of Gopal Snacks Ltd (Gopal Namkeen). Therefore, the total of Gopal Snacks IPO (Gopal Namkeen) will comprise of the sale of 1,62,09,476 shares (162.09 lakh shares approximately) which at the upper end of the price band of ₹401 per share aggregates to total issue size of ₹650 crore. The final shares are subject to marginal changes to accommodate allocation changes. The IPO of Gopal Snacks Ltd (Gopal Namkeen) will be listed on NSE and the BSE on the IPO mainboard.

The company is entirely an offer for sale, so there are no fresh funds coming in. Promoters currently hold 93.50% in the company, which will get diluted post the IPO to 80.49%. The IPO will be lead managed by Intensive Fiscal Services, Axis Capital, and JM Financial, while Link Intime India Private Ltd will be the IPO registrar.

How Gopal Snacks IPO 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 not so rapid for the retail investors. In fact, the QIB portion got fully subscribed only on the last day of the IPO while the retail portion and the HNI portion got fully subscribed only on the second day of the IPO. The overall IPO also saw the subscription book filling up only on the second day of the IPO, as a result. The Gopal Snacks IPO was kept open for a total period of 3 consecutive trading days. While the retail portion did start off strong, the eventual traction slowed in the subsequent days, which is the general norm for retail; next to the QIB and the HNI / NII portion respectively. Here is the day-wise progress in IPO subscription of the total available quota. The available over subscription in the table below represents the oversubscription; net of the anchor allocation of shares, done one working day prior to the opening of the IPO.

As can be seen from the above table, the overall Gopal Snacks IPO got 9.02 times subscribed at the close of the third and final day of the IPO on 11th March 2024. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.00 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.10X to 17.50X.
   
• The HNI / NII portion got 0.52 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 1.71X to 9.50X.
   
• Retail portion got 0.97 times subscribed at the end of the first day of the IPO. However, on the third and final day of the IPO, the subscription moved from 2.13X to 4.01X.
   
• The overall IPO got 0.61 times subscribed at the end of the first day of the IPO. However, on third and final day of the IPO, overall subscription moved from 1.48X to 9.02X.

Rapid update on the overall Gopal Snacks IPO response

The IPO saw fairly tepid 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 modest to healthy subscription numbers at the close of Day-3. In fact, the IPO of Gopal Snacks Ltd (Gopal Namkeen) got fully subscribed on the second day of the IPO only. As per the combined bid details put out by the BSE at the close of Day-3, Gopal Snacks Ltd (Gopal Namkeen) IPO was subscribed 9.02X 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 QIB segment and the HNI / NII segments saw some good traction on the last day of the IPO. 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 less aggressive on the last day, although it was fully subscribed only on Day-2 of the IPO, but subsequent traction was a tad lower in comparison. Firstly, let us look at the details of overall allocation of shares to various categories of investors. It may be noted that in the final allocation of shares, minor variations are normal as part of intra-segment adjustments. These, however, do not impact the total number of shares materially.

Data Source: BSE

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 11th March 2024, out of the 119.80 lakh shares on offer in the IPO, Gopal Snacks Ltd (Gopal Namkeen) saw bids for 1,080.83 lakh shares. This implies an overall subscription of 9.02X at a macro level. The granular break-up of subscriptions was in favour of the QIB segment 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 05th March 2024, Gopal Snacks Ltd (Gopal Namkeen) 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 48,36,657 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹401 per share (including premium of ₹400 per share) which resulted in an overall allocation of ₹193.95 crore. The anchors absorbed 28.76% of the total issue size of ₹674.35 crore.  It may be noted that half the anchor portion is locked for 1 month from the date of allotment i.e. up to April 11th, 2024. The other 50% is locked for 3 months from the date of allotment i.e., up to June 10th 2024.

The QIB portion (net of anchor allocation as explained above) had a quota of 33.94 lakh shares of which it has got bids for 593.90 lakh shares at the close of Day-3, implying a subscription ratio of 17.50X 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 Gopal Snacks Ltd (Gopal Namkeen) 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 9.50X (getting applications for 241.73 lakh shares against the quota of 25.45 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 10.18X while the below ₹10 lakh bid category (S-HNIs) got subscribed 8.12X. 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 a modest 4.01X 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 59.39 lakh shares on offer, valid bids were received for 238.19 lakh shares, which included bids for 205.36 lakh shares at the cut-off price. The IPO is priced in the band of (₹381 to ₹401 per share) and has closed for subscription as of the close of Monday, 11th March 2024.

Next Steps in the Gopal Snacks IPO (Gopal Namkeen)

The issue opened for subscription on 06th March 2024 and closed for subscription on 11th March 2024 (both days inclusive). The basis of allotment will be finalized on 12th March 2024 and the refunds will be initiated on 13th March 2024. In addition, the demat credits are expected to also happen on 13th March 2024 and the stock will list on 14th March 2024 on the NSE and the BSE in the mainboard segment. Gopal Snacks Ltd (Gopal Namkeen) will test the appetite for such small FMCG stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 13th March 2024 under ISIN (INE0L9R01028).