KK Shah Hospitals IPO subscribed 13.58 times

About the KK Shah Hospitals IPO

KK Shah Hospitals IPO opened for subscription on 27th October 2023 and closed for subscription on 31st October 2023. The stock of KK Shah Hospitals Ltd has a face value of ₹10 per share and it is a fixed price issue. The price for the IPO has been fixed at ₹45 per share. The IPO of KK Shah Hospitals Ltd has only a fresh issue component with no book built portion. It must be remembered that the fresh issue portion is EPS dilutive and equity dilutive, but OFS is just a transfer of ownership and  hence it is not EPS or equity dilutive. As part of the fresh portion of the IPO, KK Shah Hospitals Ltd will issue 19,50,000 shares (19.50 lakhs), which at the fixed IPO price of ₹45 per share aggregates to a total fresh fund raising of ₹8.78 crore. As there is no offer for sale portion in this IPO, the size of the fresh issue will also be the total size of the IPO. Hence the overall IPO size will also comprise of 19.50 lakh shares, which at the fixed IPO price of ₹45 per share will aggregate to ₹8.78 crore.

The minimum lot size for the IPO investment will be 3,000 shares. Thus, retail investors can invest a minimum of ₹135,000 (3,000 x ₹45 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 6,000 shares and having a minimum lot value of ₹270,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. Like every SME IPO, the IPO of KK Shah Hospitals Ltd also has a market making allocation with a market making inventory of 1,02,000 shares. The market maker for the issue is Rikhav Securities Ltd and they will provide two-way quotes to ensure liquidity on the counter post listing and low basis costs. Post the IPO, the promoter stake in the company will get diluted from 100.00% to 71.36%. KK Shah Hospitals Ltd will use fresh IPO funds to purchase medical equipment and for general corporate purposes. Fedex Securities Private Ltd and Shreni Shares Private Ltd will be the joint lead managers to the issue and Bigshare Services Private Ltd will be the registrar to the issue.

Final subscription status of KK Shah Hospitals IPO

Here is the subscription status of the KK Shah Hospitals IPO as at close on 31st October 2023.

As can be seen from the above table, the overall IPO of KK Shah Hospitals Ltd got subscribed a modest 13.58 times. The HNI / NII portion led the stakes with 17.75 times subscription, followed by the Retail portion at 9.41 times subscription. There was no QIB portion in the IPO allocation plan. That is a rather moderate and modest 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 rather modest to moderate traction for the IPO across all categories of 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 1,02,000 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.

The company does not have a QIB quota and hence also has not made any anchor allocation. Normally, an anchor allocation is made only when there is institutional and AIF appetite for the IPO. In this case, there was no anchor quota and hence no anchor allocation was done. The only quota was a 5.23% reservation for the market makers to provide post listing liquidity spreads in the counter. The net issue (net of the market maker allocation) has been distributed equally between the retail investors and the HNI / NII investors.

How subscription built up for the IPO of KK Shah Hospitals IPO

The oversubscription of the IPO was dominated by the HNI / NII followed by the Retail category in that order. The table below captures the day-wise progression of the subscription status of KK Shah Hospitals Ltd. The IPO was kept open for 3 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for KK Shah Hospitals Ltd.

• The HNI / NII portion got the best subscription in the KK Shah Hospitals Ltd IPO at 17.75 times and it got 1.99 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 9.41 terms overall and it got 1.00 times subscribed at the end of the first day.
   
• While the retail and HNI / NII portion got fully subscribed on the first day of the IPO itself, the overall IPO also got fully subscribed at 1.49 times at the close of the first day of the IPO itself. However, build-up of traction after that was relatively slow.
   
• The retail and 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 2.98X to 17.75X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 2.91X to 9.41X on the last day of the IPO.
   
• Just as the retail portion and the HNI portion saw the best incremental traction on the last day of the IPO, even the overall IPO saw smart traction on the last day with the subscription ratio for the overall IPO moving from 2.94X to 13.58X on the last day.

With the IPO closed for subscription at the end of October 31st, 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 03rd November 2023 while the refunds would be initiated on 06th November 2023. The shares of KK Shah Hospitals Ltd (ISIN - INE0OH401016) would be credited to the demat accounts of eligible shareholders by the close of 07th November 2023 while the stock of KK Shah Hospitals Ltd is expected to be listed on 08th November 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.