Muthoot Microfin IPO oversubscribed at 11.52 times

Muthoot Microfin IPO closed on December 20, 2023. The stock has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹277 to ₹291 per share. The IPO of Muthoot Microfin Ltd is a combination of fresh issue of shares and an offer for sale (OFS). The fresh issue portion of the IPO of Muthoot Microfin Ltd comprises the issue of 2,61,16,838 shares (261.17 lakh shares approximately), which at the upper price band of ₹291 per share will translate into a fresh issue size of ₹760.00 crore. The offer for sale (OFS) portion of the IPO of Muthoot Microfin Ltd comprises the sale of 68,72,852 shares (68.73 lakh shares approximately), which at the upper price band of ₹291 per share will translate into an Offer for sale (OFS) size of ₹200.00 crore.

Therefore, the overall IPO of Muthoot Microfin Ltd will comprise of the issue and sale of 3,29,89,690 shares (329.90 lakh shares approximately), which at the upper price band of ₹291 per share translates into total IPO size of ₹960.00 crore. The shares of Muthoot Microfin Ltd will be listed on the NSE and the BSE. The fresh issue portion will be utilized to augment its capital base to expand the asset book in future. The IPO will be lead managed by ICICI Securities, Axis Capital, JM Financial and SBI Capital Markets. KFIN Technologies Ltd will be the registrar to the issue.

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 third and final day of the IPO while the retail portion got fully subscribed on the first day of the IPO itself. The HNI / NII portion and the overall IPO saw subscription book filling up only on the second day of the IPO. The IPO was kept open for a total period of 3 days and here is the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 11.52 times subscribed at the close of the third and final day of the IPO on 20th December 2023. Here is a quick look at how the various categories saw traction on the last day of the IPO.

• The QIB portion got 0.00 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 0.48X to 17.47X.
   
• The HNI / NII portion got 0.65 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 3.28X to 13.20X.
   
• Retail portion got 1.58 times subscribed at the end of the first day of the IPO. However, on the last day of the IPO, the subscription moved from 4.31X to 7.61X.
   
• The overall IPO got 0.95 times subscribed at the end of the first day of the IPO. However, on last day of the IPO, overall subscription moved from 3.05X to 11.52X.

Rapid update on the overall IPO response

The IPO saw fairly strong 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 Muthoot Microfin Ltd got fully subscribed on the second day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Muthoot Microfin Ltd IPO was subscribed 11.52X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the Retail segment in that order.

In fact, the institutional 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 strong, although it was fully subscribed on Day-1 of the IPO itself, but subsequent traction was slower than the others. Firstly, let us look at the details of overall allocation.

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 20th December 2023, out of the 243.87 lakh shares on offer in the IPO, Muthoot Microfin Ltd saw bids for 2,809.80 lakh shares. This implies an overall subscription of 11.52X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII 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 15th December 2023, Muthoot Microfin 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 97,93,812 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹291 per share (including premium of ₹281 per share) which resulted in an overall allocation of ₹285 crore. The anchors absorbed 30% of the total issue size of ₹950 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 68.59 lakh shares of which it has got bids for 1,198.13 lakh shares at the close of Day-3, implying a subscription ratio of 17.47X 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 Muthoot Microfin 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 13.20X (getting applications for 679.12 lakh shares against the quota of 51.44 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 12.34X while the below ₹10 lakh bid category (S-HNIs) got subscribed 14.93X. This is just for 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 just 7.61X 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 120.04 lakh shares on offer, valid bids were received for 913.73 lakh shares, which included bids for 794.74 lakh shares at the cut-off price. The IPO is priced in the band of (₹277 to ₹291 per share) and has closed for subscription as of the close of Wednesday, 20th December 2023.