Happy Forgings IPO Final Subscription at 82.04 times

Happy Forgings 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 ₹808 to ₹850 per share. The IPO of Happy Forgings Ltd was a combination of fresh issue and offer for sale (OFS). The fresh issue portion comprised the issue of 47,05,882 shares (47.06 lakh shares approximately), which at the upper price band of ₹850 per share works out to ₹400.00 crore. The offer for sale portion of the Happy Forgings IPO comprises the sale of 71,59,920 shares (71.60 lakh shares approximately), which at ₹850 per share translates into OFS size of ₹608.59 crore. Therefore, the total issue size of Happy Forgings Ltd comprised the issue and sale of 1,18,65,802 shares (118.66 lakh shares approximately), which at the upper price band of ₹850 per share was worth ₹1,008.59 crore. The stock will be listed on the NSE and the BSE. The fresh funds will be utilized to purchase of plant & machinery and repay outstanding loans of the company. The IPO will be lead managed by JM Financial, Axis Capital, Equirus Capital and Motilal Oswal Investment Advisors. Link Intime India Private Ltd is the registrar.

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 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 82.04 times subscribed at the close of the third and final day of the IPO on 21st 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 0.01 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.44X to 220.48X.
   
• The HNI / NII portion got 3.68 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 16.94X to 62.17X.
   
• Retail portion got 3.17 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 7.87X to 15.09X.
   
• The overall IPO got 2.38 times subscribed at the end of the first day of the IPO. However, on last day of the IPO, overall subscription moved from 7.69X to 82.04X.

Rapid update on the overall IPO response

The IPO saw fairly steady 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 Happy Forgings Ltd got fully subscribed on the first day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Happy Forgings Ltd IPO was subscribed 82.04X 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 21st December 2023, out of the 83.66 lakh shares on offer in the IPO, Happy Forgings Ltd saw bids for 6,862.92 lakh shares. This implies an overall subscription of 82.04X 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 18th December 2023, Happy Forgings 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 35,59,740 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹850 per share (including premium of ₹848 per share) which resulted in an overall allocation of ₹302.58 crore. The anchors absorbed 30% of the total issue size of ₹1,008.59 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 23.10 lakh shares of which it has got bids for 5,094.04 lakh shares at the close of Day-3, implying a subscription ratio of 220.48X 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 Happy Forgings 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 62.17X (getting applications for 1,129.31 lakh shares against the quota of 18.17 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 68.46X while the below ₹10 lakh bid category (S-HNIs) got subscribed 49.59X. 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 15.09X 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 42.39 lakh shares on offer, valid bids were received for 639.57 lakh shares, which included bids for 558.52 lakh shares at the cut-off price. The IPO is priced in the band of (₹808 to ₹850 per share) and has closed for subscription as of the close of Thursday, 21st December 2023.