Hariom Atta & Spice IPO Subscribed 2,013.64 times

About the HOAC Foods India IPO (Hariom Atta & Spices IPO)  

HOAC Foods India IPO (Hariom Atta & Spices IPO) has a face value of ₹10 per share and it is a fixed price issue. The price for the fixed price issue is set at ₹48 per share. Being a fixed price issue, the question of price discovery does not arise. The IPO of HOAC Foods India Ltd (Hariom Atta & Spices) has only a fresh issue component and no OFS portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership and  hence is not EPS or equity dilutive. As part of the fresh issue portion in the IPO, (HOAC Foods India IPO) Hariom Atta & Spices IPO will issue a total of 11,55,000 shares (11.55 lakh shares), which at the fixed IPO price of ₹48 per share aggregates to fresh fund raising of ₹5.54 crore. Since there is no offer for sale (OFS) portion, the fresh issue will also double up as the overall IPO size. Therefore, the overall IPO will also comprise of the issue of 11,55,000 shares (11.55 lakh shares) which at the fixed IPO price of ₹48 per share will aggregate to overall IPO size of ₹5.54 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 93,000 shares. Giriraj Stock Broking Private Ltd will be the market makers to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing. The promoter holding in the company currently stands at 99.99%. However, post the fresh issue of shares, promoter equity holding share will get diluted to 69.95%. The fresh issue funds will be used by the company for funding the working capital expenses. GYR Capital Advisors Private Ltd will be the lead manager to the issue, and KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is Giriraj Stock Broking Private Ltd. The IPO of HOAC Foods India Ltd (Hariom Atta & Spices) will be listed on the SME IPO segment of the NSE.

Read more about Hariom Atta & Spices IPO

Final subscription status of HOAC Foods India IPO (Hariom Atta & Spices)

Here is subscription status of HOAC Foods India IPO (Hariom Atta & Spices) at close on 21st May 2024.

As can be seen from the above table, the overall IPO of HOAC Foods India Ltd (Hariom Atta & Spices) got subscribed an impressive 2,013.64 times. The Retail investor portion led the stakes with 2,556.46 times subscription, followed by the HNI / NII portion at 1,432.60 times subscription. There was no dedicated QIB allocation in this IPO. That is an extremely robust response to an SME IPO, especially if you consider the median subscriptions that similar other SME IPOs have got in the past. Also, in the current volatile market conditions, it does come across as an outstanding performance. The subscription saw strong traction for the IPO across both the categories of investors; retail and HNI / NII investors.

Allocation quota for various categories

The issue was open for retail investors and 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 93,000 shares were allocated as market maker portion to Giriraj Share Broking Private 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.

Data Source: Company RHP

In the above IPO of HOAC Foods India Ltd (Hariom Atta & Spices), there is no dedicated QIB allocation in the IPO. The anchor allocation to the anchor investors is normally carved out of this QIB allocation and hence the company has not done any anchor allocation in the IPO. Normally, the anchor is done to institutional investors, which gives confidence and assurance to the retail shareholders about the institutional interest in the stock The anchor allocation is normally adjusted and deducted from the QIB quota and only the net number of shares is available for public issue under the QIB portion.

However, in this case, there is neither any QIB quota, nor any anchor allocation to investors ahead of the IPO. Normally, the anchor portion bidding is done on the day before the IPO opens and such anchor investments are subjected to lock in at two levels. Half the anchor allocation is locked in for 30 days while the balance anchor allocation shares are locked in for a period of 90 days. The allocation of market maker inventory of 8.05% is outside the anchor portion. The market making portion is more towards ensuring liquidity post listing and ensuring low basis spreads on the stock.

How subscription built up for the HOAC Foods India IPO (Hariom Atta & Spices)

The oversubscription of the IPO was dominated by the Retail investors followed by the HNI / NII Investor category in that order. The table below captures the day-wise progression of the subscription status of HOAC Foods India Ltd (Hariom Atta & Spices). The IPO was kept open for 3 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for HOAC Foods India Ltd (Hariom Atta & Spices).

• The Retail portion got the best subscription in the HOAC Foods India Ltd (Hariom Atta & Spices) IPO at 2,556.46 times and it got 86.29 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the Retail portion in terms of subscription at 1,432.60 times overall and it got 18.30 times subscribed at the end of the first day.
   
• While the retail portion and the HNI / NII portion got fully subscribed on the first day of the IPO itself, the overall IPO subscription was also filled up on the first day itself.
   
• The overall IPO, which saw subscription of 2,013.64 times at close, got fully subscribed at only 52.31 times at the close of the first day.
   
• The HNI / NII portion saw the best traction on the last day of the IPO. The HNI / NII portion saw the total subscription ratio moving from 72.76X to 1,432.60X on the third and final day of the IPO.
   
• Like the HNI / NII portion, even the Retail portion saw outstanding traction on the last day of the IPO. In fact, the retail subscription ratio moved from 336.09X to 2,556.46X on the last day of the IPO.
   
• What about the Overall IPO. The last day story was true for the overall IPO also. On the third and final day of the IPO, the subscription ratio overall moved from 204.56X to 2,013.64X on the last day of the IPO.

It is not just that the final subscription was strong, even the journey was very robust.

Next steps in the IPO process

The issue opened for subscription on 16th May 2024 and closed for subscription on 21st April 2024 (both days inclusive). The basis of allotment will be finalized on 22nd May 2024 and the refunds will be initiated on 23rd May 2024. In addition, the demat credits are also expected to happen on 23rd May 2024 and the stock is scheduled to list on 24th May 2024 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated. The demat credits to the demat account to the extent of allotment will happen by the close of 23rd May 2024 under ISIN Number (INE0S6S01017).