JG Chemicals IPO Subscribed at 27.78 times

About JG Chemicals IPO

The stock of JG Chemicals IPO has a face value of ₹10 per share and the book building price band was fixed between ₹210 and ₹221 per share. The IPO of JG Chemicals Ltd will be a combination of a fresh issue of shares and offer for sale (OFS) component. 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 fresh issue portion of the JG Chemicals IPO comprises the issue of 74,66,063 shares (74.66 lakh shares approximately), which at the upper price band of ₹221 per share will translate into a fresh issue size of ₹165.00 crore. The offer for sale (OFS) portion of the IPO of JG Chemicals Ltd comprises the sale / offer of 39,00,000 shares (39.00 lakh shares), which at the upper price band of ₹221 per share will translate into an OFS size of ₹86.19 crore.

Out of the OFS size of 39 lakh shares, the entire shares will be offered by the promoter group. This will include the sale of 20.29 lakh shares by Vision Projects and Finvest Private Ltd, 12.60 lakh shares by Suresh Kumar Jhunjhunwala, 6.10 lakh shares by Anirudh Jhunjhunwala and a small quantity by Jayant Commercial Ltd. Thus, the total IPO of JG Chemicals Ltd will comprise of a fresh issue and an OFS of 1,13,66,063 shares (113.66 lakh shares approximately) which at the upper end of the price band of ₹221 per share aggregates to total issue size of ₹251.19 crore. However, the eventual size of the IPO would be subject to minor changes due to adjustments in the size of allocation. The IPO of JG Chemicals Ltd will be listed on the NSE and the BSE on the IPO mainboard.

The fresh funds will be used to invest in its materials subsidiary, BDJ Oxides for funding capex and for repayment of its loans. Part of the fresh funds will also be used for long term working capital. Promoters currently hold 100% in the company, which will get diluted post the IPO to 70.99%. The IPO will be lead managed by Centrum Capital, Emkay Global and Keynote Financial Services, while KFIN Technologies Ltd will be the IPO registrar.

Read more about JG Chemicals IPO

How subscriptions evolved in the JG Chemicals 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 last day of the IPO while the retail portion and the HNI portion got comfortably fully subscribed on the first day of the IPO itself. As a result, the overall IPO also saw the subscription book filling up on the first day of the IPO itself. The 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, but still substantially oversubscribed by the close of the third day of the IPO. The HNI / NII portion got the highest oversubscription, followed by the QIB portion and the retail portion in that order.  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 IPO got 27.78 times subscribed at the close of the third and final day of the IPO on 07th 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 0.02 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.46X to 32.09X.
   
• The HNI / NII portion got 3.03 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 10.00X to 46.32X.
   
• Retail portion got 3.85 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 8.73X to 17.43X.
   
• The overall IPO got 2.58 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 6.64X to 27.78X.

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 JG Chemicals Ltd got fully subscribed on the first day of the IPO itself. As per the combined bid details put out by the BSE at the close of Day-3, JG Chemicals Ltd IPO was subscribed 27.78X overall, with best demand coming from the HNI / NII segment, followed by the QIB Segment and the Retail segment in that order.

In fact, the institutional QIB 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 less aggressive on the last day, although it was fully subscribed on Day-1 of the IPO itself, but subsequent traction was a tad more cautious. 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 07th March 2024, out of the 81.69 lakh shares on offer in the IPO, JG Chemicals Ltd saw bids for 2,269.11 lakh shares. This implies an overall subscription of 27.78X at a macro level. The granular break-up of subscriptions was in favour of the HNI / NII investors followed by the QIB 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

JG Chemicals IPO Subscription status of QIB Portion

On 04th March 2024, JG Chemicals IPO 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 34,09,818 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹221 per share (including premium of ₹211 per share) which resulted in an overall allocation of ₹75.36 crore. The anchors absorbed 29.45% of the total issue size of ₹255.89 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 10th, 2024. The other 50% is locked for 3 months from the date of allotment i.e., up to June 09th 2024.

The QIB portion (net of anchor allocation as explained above) had a quota of 22.90 lakh shares of which it has got bids for 734.94 lakh shares at the close of Day-3, implying a subscription ratio of 32.09X 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 JG Chemicals 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 46.32X (getting applications for 816.96 lakh shares against the quota of 17.64 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 48.59X while the below ₹10 lakh bid category (S-HNIs) got subscribed 41.80X. This is just in the form of additional information and is already part of the overall HNI bids explained in the previous para.

JG Chemicals IPO Subscription status of Retail Individuals

The retail portion was subscribed a healthy 17.43X 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 41.15 lakh shares on offer, valid bids were received for 717.22 lakh shares, which included bids for 618.21 lakh shares at the cut-off price. The IPO is priced in the band of (₹210 to ₹221 per share) and has closed for subscription as of the close of Thursday, 07th March 2024.

Next Steps in the JG Chemicals IPO

The issue opened for subscription on 05th March 2024 and closed for subscription on Thursday, 07th March 2024 (both days inclusive). The basis of allotment will only be finalized on Monday after three holidays. The basis of allotment will be finalized on 11th March 2024 and the refunds will be initiated on 12th March 2024. In addition, the demat credits are expected to also happen on 12th March 2024 and the stock will list on 13th March 2024 on the NSE and the BSE. JG Chemicals Ltd will test the appetite for such specialty chemical plays in India. The credits to the demat account to the extent of shares allotted will happen by the close of 12th March 2024 under ISIN (INE0MB501011).