Graphisads IPO Final Subscription: 3.85x oversubscribed

About the Graphisads IPO

Graphisads IPO opened for subscription on 30th November 2023 and closed for subscription on 05th December 2023. The stock of Graphisads has a face value of ₹10 per share and it is a fixed price issue. The issue price for the fresh issue IPO has been fixed at ₹111 per share. Graphisads IPO has only a fresh issue component with no book built portion. As part of the fresh portion of the IPO, Graphisads Ltd will issue a total of 48,12,000 shares (48.12 lakh shares), which at the IPO fixed price of ₹111 per share aggregates to a total IPO fund raising of ₹53.41 crore. Since there is no offer for sale portion, the size of the fresh issue will also be the total size of the IPO. Hence the total IPO size will also comprise of 48,12,000 shares, which at the fixed IPO price of ₹111 per share will aggregate to ₹53.41 crore.

The minimum lot size for the IPO investment will be 1,200 shares. Thus, retail investors can invest a minimum of ₹133,200 (1,200 x ₹111 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 2,400 shares and having a minimum lot value of ₹266,400. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. Like any SME IPO, Graphisads Ltd IPO also has a market making portion with a market maker inventory allocation of 2,42,400 shares. The market maker for the issue is Rikhav Securities Ltd, providing two-way quotes to ensure liquidity and low basis costs post listing. The promoters hold 99.99% stake in the company, which will get diluted to 75% post the IPO. Graphisads Ltd will use the fresh funds to repay borrowings and for working capital funding needs. First Overseas Capital Ltd is the lead manager to the issue, and KFIN Technologies Ltd is the registrar to the issue.

Final subscription status of Graphisads IPO

Here is the subscription status of the Graphisads Ltd as at close on 05th December 2023.

As can be seen from the above table, the overall IPO of Graphisads Ltd got subscribed just about 3.85 times. The Retail portion led the stakes with 5.51 times subscription, followed by the HNI / NII portion at 2.01 times subscription. There was no separate QIB allocation to investors in the IPO. That is a very modest and mediocre 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 limited traction and public appetite for the IPO across all categories of investors.

Allocation quota for various categories

The issue was open for retail investors, and the non-institutional investors, comprising predominantly of 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 2,42,400 shares were allocated as market maker portion to Rikhav Securities 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 Graphisads Ltd, there was no QIB portion and hence there was no anchor allocation made. Normally, the anchor allocation is carved out of the QIB portion and it is completed a day ahead of the opening of the IPO. The company did not have any anchor quota for institutional investors in the IPO. The net issue was just net of the market maker portion, which was apportioned equally between the retail investors and the non-institutional investors. The market making portion of 5.04% is independent of the anchor allocation. The anchor portion is carved out of the QIB portion and so the QIB quota available to the public is normally reduced by the anchor size. There is no adjustment in the above allocation, in the absence of any anchor quota.

How subscription built up for the Graphisads IPO

The oversubscription of the IPO was fairly modest and it was dominated by the retail investors followed closely by the HNI / NII investors. There was no QIB allocation in the IPO. The table below captures the day-wise progression of the subscription status of Graphisads Ltd. The IPO was kept open for 4 working days and this captures the subscription progress on each of these days as well as at the close of the IPO on 05th December 2023.

Here are the key takeaways from the subscription numbers on a day-wise basis for Graphisads IPO.

• The Retail portion got the best subscription in the Graphisads Ltd IPO at 5.51 times and it got just 0.61 times subscribed on the first day of the IPO.
   
• The HNI / NII portion was behind the Retail portion in terms of subscription at 2.01 times overall and it got 0.55 times subscribed at the end of the first day.
   
• While the retail portion got fully subscribed on the second day of the IPO, the HNI / NII portion got fully subscribed only on the third day of the IPO itself. Overall, the IPO got fully subscribed on the second day, although progress after that was quite slow.
   
• The overall IPO got subscribed 3.85 times at the close of Day-4 of the IPO but it had been subscribed just about 0.58 times at the end of the first day. For all categories, even the traction on the last day was fairly limited.
   
• The retail and HNI / NII portion saw very limited traction on the last day of the IPO. The Retail portion saw the total subscription ratio moving from 2.80X to 5.51X on the last day of the IPO. Even the HNI / NII portion saw the total subscription ratio move from just 1.19X to 2.01X on the last day of the IPO.
   
• If you look at the overall IPO subscription movement on the last day of the IOP, it just about moved from 2.00X to 3.85X. This was despite the IPO remaining open for subscription for a full 4 days in the primary market.

What are the next stages to watch out for?

With the IPO closed for subscription at the end of December 05th, 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 08th December 2023 while the refunds would be initiated on 11th December 2023. The shares of Graphisads Ltd (ISIN - INE0POU01017) would be credited to the demat accounts of eligible shareholders by the close of 12th December 2023 while the stock of Graphisads Ltd is expected to be listed on 13th December 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.