Konstelec Engineers IPO Subscribed 341.80 times

About the Konstelec Engineers IPO

The stock of Konstelec Engineers IPO has a face value of ₹10 per share and it is a book built issue. The price band for the book built issue has been fixed in the range of ₹66 to ₹70 per share. The final price of the IPO will be decided in this price band. The IPO of Konstelec Engineers Ltd has only a fresh issue component and no offer for sale (OFS) portion. The fresh issue is EPS dilutive and equity dilutive. As part of the fresh issue portion of the IPO, Konstelec Engineers Ltd will issue a total of 41,00,000 shares (41.00 lakh shares), which at the upper band of the book building band of ₹70 per share aggregates to fresh fund raising of ₹28.70 crore. Since there is no offer for sale (OFS) portion, the fresh issue size will also double up as the overall IPO size. Therefore, the overall IPO size will also comprise of the issue of 41,00,000 shares at ₹70 per share aggregating to overall IPO size of ₹28.70 crore.

Like every SME IPO, Konstelec Engineers IPO will also have a market making portion with a market maker inventory allocation of 2,06,000 shares. The market maker for the issue is yet to be announced officially. The market maker will provide 2-way quotes to ensure liquidity on the counter and low basis costs, post listing. The promoter holding in the company currently stands at 91.65% and will be diluted to 66.77% post the IPO. The fresh issue of funds will be used for meeting working capital needs of the company and for general corporate expenses. Beeline Advisors Private Ltd will be the lead manager to the issue, and Skyline Financial Services Private Ltd will be the registrar to the issue.   

Final subscription status of Konstelec Engineers Ltd

Here is the subscription status of the Konstelec Engineers IPO as at close on 24th January 2024.

As can be seen from the above table, the overall IPO of Konstelec Engineers Ltd got subscribed an impressive 341.80 times. The Retail portion led the stakes with 437.67 times subscription, followed by the HNI / NII portion at 421.36 times subscription. The QIB portion of the IPO also got a healthy subscription of 113.80 times. That is a very strong and smart 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 shown strong traction for the IPO across all the three categories of investors; QIB, retail and HNI / NII investors.

Allocation quota for various categories

The issue was open for QIBs, retail investors and the HNI / NII investors. There was a broad quota designed for each of the segments viz. the retail, QIB and the HNI / NII segments. A total of 2,06,000 shares were allocated as market maker portion to Spread X 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.

In the above IPO of Konstelec Engineers Ltd, the anchor allocation of 11,66,000 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.42% of the issue size to 18.98% of the issue size. The anchor allocation bidding opened on January 18th, 2024 and also closed on the same day. A total of 11,66,000 shares were allocated across 7 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹70 per share (which includes face value of ₹10 per share and premium of ₹60 per share).

The total anchor allocation value was worth ₹8.16 crore. The 7 anchor allottees included Finavenue Growth Fund (24.53%), India Max Investment Fund Ltd (13.72%), Moneywise Financial Services (12.35%), Rajasthan Global Securities Private Ltd (12.35%), Nexus Global Opportunities Fund (12.35%), Minerva Emerging Opportunities Fund (12.35%), and Persistent Growth Fund – Varsu India Growth Story (12.35%). These 7 anchor investors accounted for the entire 100% of the anchor allocation. Out of the anchor shares allocated to investors on January 18th, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to March 06th, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to June 06th, 2024). The allocation of market maker inventory of 5.02% is outside the anchor portion.

How subscription built up for the IPO of Konstelec Engineers Ltd

The oversubscription of the IPO was dominated by the Retail category followed by the HNI / NII category and the QIB category in that order. The table below captures the day-wise progression of the subscription status of Konstelec Engineers 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 Konstelec Engineers Ltd.

• The Retail portion got the best subscription in the Konstelec Engineers Ltd IPO at 437.67 times and it got 40.02 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the Retail portion in terms of subscription at 421.36 times overall and it got 19.77 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 113.80 times overall and it got 7.09 times subscribed at the end of the first day.
   
• While the QIB, retail and HNI / NII portion getting fully subscribed on the first day of the IPO itself, even the overall subscription was filled up on the first day itself. The overall IPO which saw subscription of 341.80 times also got fully subscribed at 26.28 times at the close of the first day of the IPO itself.
   
• The retail, and HNI / NII portion saw the best traction on the last day of the IPO. The Retail portion saw the total subscription ratio moving from 234.58X to 437.67X on the last day of the IPO. Even the HNI / NII portion saw the total subscription ratio move from 116.81X to 421.36X on the last day of the IPO.
   
• The last day traction story was true for QIBs and the overall IPO also. The QIB portion saw the total subscription ratio moving from 12.80X to 113.80X on the last day of the IPO. Finally, regarding the overall IPO subscription ratio, it also moved from 146.03X to 341.80X on the last day of the IPO.

Overall, the IPO of Konstelec Engineers Ltd became one of the few SME IPOs in the last one year to have got subscribed more than 300 times and that is a good sign of things to come.

Next steps after the closure of the IPO

With the IPO closed for subscription at the end of January 24th, 2024, 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 25th January 2024 and the refunds will be initiated on 29th January 2024. In addition, the demat credits are expected to happen on 29th January 2024 and the stock is scheduled to list on 30th January 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 29th January 2024 under ISIN Number (INE0QEI01011).