HMA Agro Industries IPO subscribed 1.62 times at close

HMA Agro Industries IPO worth ₹498.16 crore , consisted of an offer for sale and a fresh issue. While the OFS is just a transfer of ownership, the fresh issue of shares is EPS dilutive. The IPO saw fairly tepid response on Day-1, Day-2 and Day-3 of the IPO and closed with rather moderate subscription numbers at the close of Day-4. In fact, the company got fully subscribed only on Day-4 of the IPO. As per the combined bid details put out by the BSE at the close of Day-4, HMA Agro Industries IPO was subscribed at 1.62X overall, with best demand coming from the HNI / NII segment, followed by the QIB segment and the retail segment in that order. In fact, only the institutional segment saw some good traction on the last day. The HNI portion did do better but there was no surge of funding applications coming on the last day of the IPO. Retail portion actually did not get fully filled up. Here are the details of the overall allocation first and foremost.

As of close of 23rd June 2023, out of the 60.54 lakh shares on offer in the IPO (net of the anchor allocation), HMA Agro Industries Ltd saw bids for 97.92 lakh shares. This implies an overall subscription of just about 1.62X. The granular break-up of subscriptions was in favour of the HNI / NII investors followed by the QIB investors while the retail portion got the lowest subscription among the various categories. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also. However, the QIB bids hardly picked momentum even on the last day and just about managed to scrape through on the final day.

HMA Agro Industries Ltd IPO Subscription Day-4

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 19th June 2023, HMA Agro Industries Ltd did an anchor placement ahead of the IPO to a set of anchor investors. The anchors picked up 24,61,537 shares accounting for 29% of the total IPO size. The anchor placement reporting was made to the BSE late on 19th June 2023. The IPO of HMA Agro Industries Ltd opened on 20th April 2023 in the price band of ₹555 to ₹585 and closed for subscription on 23rd April 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹585. Let us focus on the anchor allotment portion ahead of the HMA Agro Industries Ltd IPO. Here are the details of the anchor allocation.

The QIB portion (net of anchor allocation as explained above) has a quota of 12.97 lakh shares of which it has got bids for 30.15 lakh shares at the close of Day-4, implying a subscription ratio of 1.74X for QIBs at the close of Day-4. 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 HMA Agro Industries Ltd IPO subscription overall, the actual demand did turn to be quite moderate for the IPO.

HNI / NII Portion

The HNI portion got subscribed 2.97X (getting applications for 38.58 lakh shares against the quota of 12.97 lakh shares). That is a rather steady response at the close of Day-4 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 not exactly visible as the overall HNI / NII portion just about added to its heft on the last day. However, the HNI portion did eventually manage to sail through.

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 3.82X while the below ₹10 lakh bid category (S-HNIs) got subscribed 1.29X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Retail Individuals

The retail portion was subscribed just 0.96X at the close of Day-4, showing weak retail appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 30.27 lakh shares on offer, valid bids were received for only 29.19 lakh shares, which included bids for 24.15 lakh shares at the cut-off price. The IPO is priced in the band of (₹555-₹585) and has closed for subscription as of the close of Friday, 23rd June 2023.

Finally, let us look at how the subscriptions evolved on a day-wise basis.

The response was robust only from the HNI segment with the retail and QIB segment performing below expectations in the HMA Agro Industries Ltd IPO.