Piotex Industries IPO Subscribed 107.44 times

About the Piotex Industries IPO

The stock of Piotex Industries IPO has a face value of ₹10 per share and it is a fixed price issue. The fixed price for issue is set at ₹94 per share. The IPO of Piotex Industries Ltd has only a fresh issue component and no offer for sale (OFS) portion. While 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 issue portion of the IPO, Piotex Industries Ltd will issue a total of 15,39,600 shares (15.40 lakh shares approximately), which at the fixed IPO price of ₹94 per share aggregates to fresh fund raising of ₹14.47 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 15,39,600 shares (15.40 lakh shares approximately) which at the fixed IPO price of ₹94 per share will aggregate to overall IPO size of ₹14.47 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 78,000 shares. Spread X Securities Private Ltd will be the market maker to the issue. The market maker provides two-way quotes to ensure liquidity on the counter and low basis costs, post listing. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares, the promoter equity holding share will get diluted to 69.83%. The fresh issue funds will be used by the company towards funding the working capital requirements of the business. Beeline Capital Advisors Private Ltd will be the lead manager to the issue, and Cameo Corporate Services Ltd will be the registrar to the issue. The market maker for the issue is Spread X Securities Private Ltd. The IPO of Piotex Industries Ltd will be listed on the SME IPO segment of the BSE.

Final subscription status of Piotex Industries IPO

Here is subscription status of Piotex Industries IPO at close on 14th May 2024.

As can be seen from the above table, the overall IPO of Piotex Industries Ltd got subscribed a solid 107.44 times. The HNI / NII portion led the stakes with 115.21 times subscription, followed by the Retail portion at 93.33 times subscription. There was no dedicated QIB allocation in this IPO. That is an extremely robust response to an SME IPO, especially if you consider the median subscriptions that similar other BSE-SME IPOs have got in the past. Also, in the current volatile market conditions, it does come across as a good performance. The subscription saw modestly strong traction for the IPO across both the categories of investors; retail and HNI / NII 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 78,000 shares were allocated as market maker portion to Spread X Securities Private 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 Piotex Industries Ltd, there is no dedicated QIB allocation in the IPO. The anchor allocation to the anchor investors is normally carved out of this QIB allocation and hence the company has not done any anchor allocation in the IPO. Normally, the anchor is done to institutional investors, which gives confidence and assurance to the retail shareholders about the institutional interest in the stock The anchor allocation is normally adjusted and deducted from the QIB quota and only the net number of shares is available for public issue under the QIB portion.

However, in this case, there is neither any QIB quota, nor any anchor allocation to investors ahead of the IPO. Normally, the anchor portion bidding is done on the day before the IPO opens and such anchor investments are subjected to lock in at two levels. Half the anchor allocation is locked in for 30 days while the balance anchor allocation shares are locked in for a period of 90 days. The allocation of market maker inventory of 5.06% is outside the anchor portion. The market making portion is more towards ensuring liquidity post listing and ensuring low basis spreads on the stock.

How subscription built up for the Piotex Industries IPO?

The oversubscription of the IPO was dominated by the HNI / NII investors followed by the Retail Investor category in that order. The table below captures the day-wise progression of the subscription status of Piotex Industries 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 Piotex Industries Ltd.

• The HNI / NII portion got the best subscription in the Piotex Industries Ltd IPO at 115.21 times and it got 0.77 times subscribed on the first day of the IPO.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 93.33 times overall and it got 0.75 times subscribed at the end of the first day.
   
• As the retail portion and the HNI / NII portion got fully subscribed only on the second day of the IPO; the overall IPO also got fully subscribed on the second day of the IPO.
   
• The overall IPO got subscribed 107.44 times at close. The overall issue got subscribed at 0.80 times at the close of the first day.
   
• The HNI / NII portion saw the best traction on the last day of the IPO with total subscription ratio moving from 1.61X to 115.21X on the third and final day of the IPO.
   
• Even the Retail portion saw very good traction on the last day of the IPO; with subscription ratio moving from 6.05X to 93.33X on the last day of the IPO.
   
• The last day story was true for the Overall IPO too; with the third and final day subscription ratio moving from 3.87X to 107.44X on Day-3 of the IPO.

It is not just that the final subscription was modestly strong, even the journey was robust. The subscriptions were well above the median for similar BSE-SME IPOs.

Next steps in the IPO process

The issue opened for subscription on 10th May 2024 and closed for subscription on 14th May 2024 (both days inclusive). The basis of allotment will be finalized on 15th May 2024 and the refunds will be initiated on 16th May 2024. In addition, the demat credits are expected to also happen on 16th May 2024 and the stock will list on 17th May 2024 on the BSE in the SME segment. The credits to the demat account to the extent of shares allotted will happen by the close of 16th May 2024 under ISIN (INE0R4W01015).