Mukka Proteins IPO Subscribed 136.89 times

About the IPO of Mukka Proteins Ltd

The stock of Mukka Proteins Ltd has a face value of ₹1 per share and the price band for the book building IPO has been set in the range of ₹26 to ₹28 per share. The IPO of Mukka Proteins Ltd will be entirely a fresh issue of shares with no offer for sale (OFS) component. 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 IPO of Mukka Proteins Ltd comprises the issue of 8,00,00,000 shares (800 lakh shares), which at the upper price band of ₹28 per share will translate into a fresh issue size of ₹224 crore. In the absence of any offer for sale, the fresh issue will also double up as the overall issue size of the IPO.

Therefore, the overall IPO of Mukka Proteins Ltd will also comprise of the issue of 8,00,00,000 shares (800 lakh shares) which at the upper end of the price band of ₹28 per share aggregates to total issue size of ₹224 crore. The IPO of Mukka Proteins Ltd will be listed on the NSE and the BSE on the IPO mainboard. The IPO will entirely be a fresh issue and the fresh funds will be used to invest in its associates, Ento Proteins Private Ltd, to fund its working capital needs. Part of the funds will also be utilized for meeting the working capital needs of Mukka Proteins and for general corporate expenses. Promoters currently hold 100% in the company, which will get diluted post the IPO to 73.33%. The IPO will be lead managed by Fedex Securities Private Ltd, while Cameo Corporate Services Ltd will be the IPO registrar.

How subscriptions evolved in the 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. 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; next to the QIB and the HNI / NII portion respectively. 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 136.89 times subscribed at the close of the third and final day of the IPO on 04th 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 1.01 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 1.86X to 189.28X.
   
• The HNI / NII portion got 1.60 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 6.26X to 250.26X.
   
• Retail portion got 4.07 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 10.38X to 58.36X.
   
• The overall IPO got 2.67 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 7.07X to 136.89X.

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 Mukka Proteins 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, Mukka Proteins Ltd IPO was subscribed 136.89X overall, with best demand coming from the HNI 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 lower in comparison. 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 04th March 2024, out of the 560.00 lakh shares on offer in the IPO, Mukka Proteins Ltd saw bids for 76,657.79 lakh shares. This implies an overall subscription of 136.89X at a macro level. The granular break-up of subscriptions was in favour of the HNI / NII segment 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

Subscription status of QIB Portion

On 28th February 2024, Mukka Proteins Ltd 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 2,39,99,565 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹28 per share (including premium of ₹27 per share) which resulted in an overall allocation of ₹67.20 crore. The anchors absorbed 30% of the total issue size of ₹224 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 04th, 2024. The other 50% is locked for 3 months from the date of allotment i.e., up to June 03rd 2024.

The QIB portion (net of anchor allocation as explained above) had a quota of 160.00 lakh shares of which it has got bids for 30,285.31 lakh shares at the close of Day-3, implying a subscription ratio of 189.28X 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 Mukka Proteins 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 250.26X (getting applications for 30,031.08 lakh shares against the quota of 120 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 254.15X while the below ₹10 lakh bid category (S-HNIs) got subscribed 242.48X. This is just in the form of additional information and is already part of the overall HNI bids explained in the previous para.

Subscription status of Retail Individuals

The retail portion was subscribed a healthy 58.36X 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 280 lakh shares on offer, valid bids were received for 16,341.39 lakh shares, which included bids for 14,755.00 lakh shares at the cut-off price. The IPO is priced in the band of (₹26 to ₹28 per share) and has closed for subscription as of the close of Monday, 04th March 2024.

Next Steps in the Mukka Proteins Ltd IPO

The issue opened for subscription on 29th February 2024 and closed for subscription on 04th Marcy 2024 (both days inclusive). The basis of allotment will be finalized on 05th March 2024 and the refunds will be initiated on 06th March 2024. In addition, the demat credits are expected to also happen on 06th March 2024 and the stock will list on 07th March 2024 on the NSE and the BSE. Mukka Proteins Ltd will test the appetite for such hospitality stocks in India. The credits to the demat account to the extent of shares allotted will happen by the close of 06th March 2024 under ISIN (INE0CG401037).