Presstonic Engineering IPO Subscription Soars to 168.25 Times

About the Presstonic Engineering Ltd IPO

Presstonic Engineering IPO opened for subscription on 11th December 2023 and closed for subscription on 13th December 2023. The stock of Presstonic Engineering Ltd has a face value of ₹10 per share and it is a fixed price issue with the issue price already fixed at ₹72 per share. The IPO of Presstonic Engineering Ltd only has a fresh issue component with no offer for sale (OFS) portion in the IPO. The fresh issue happens to be EPS and equity dilutive for the company. The fresh issue of shares of Presstonic Engineering Ltd entails the issue of 32,36,800 shares (32.37 lakh shares approximately), which at the fixed IPO price of ₹72 per share aggregates to a fresh issue size of ₹23.30 crore. Since there is no offer for sale portion, the total size of the fresh issue will also be the overall size of the IPO. Hence the total IPO size will also comprise of 32,36,800 shares, which at the fixed IPO price of ₹72 per share will aggregate to overall IPO size of ₹23.30 crore.

Like every SME IPO, this issue also has a market making portion with a market maker portion allocation of 1,63,200 shares. The market maker for the issue is Nikunj Stock Brokers Ltd and they will provide two-way quotes to ensure liquidity on the counter as well as low basis costs post listing of the IPO. Presstonic Engineering IPO was promoted by Herga Poornachandra Kedilaya and Yermal Giridhar Rao. The promoter holding in the company, post the IPO will get diluted from 99.97% to 57.99%. The company will sue the fresh funds for funding capex, repayment / prepayment of existing high cost loans, and funding the working capital gaps. Finshore Management Services 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 Nikunj Stock Brokers Ltd.

Final subscription status of Presstonic Engineering Ltd

Here is subscription status of Presstonic Engineering Ltd at close on 13th December 2023.

As can be seen from the above table, the overall IPO of Presstonic Engineering Ltd got subscribed an impressive 168.25 times. The retail portion led the stakes with 188.94 times subscription, followed by the HNI / NII portion at 133.56 times subscription. There was no dedicated QIB allocation in this IPO. 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 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 1,63,200 shares were allocated as market maker portion to Nikunj Stock Brokers 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 Presstonic Engineering Ltd, there is no QIB allocation in the IPO. The anchor allocation to the anchor investors is normally done 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 5.04% 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 IPO of Presstonic Engineering Ltd

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

• The retail portion got the best subscription in the Presstonic Engineering Ltd IPO at 188.94 times and it got 27.86 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the retail portion in terms of subscription at 133.56 terms overall and it got 5.89 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, even the overall subscription was filled up on the first day itself. The overall IPO which saw subscription of 168.25 times also got fully subscribed at 16.88 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 HNI / NII portion saw the total subscription ratio moving from 21.73X to 133.56X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 78.16X to 188.94X on the last day of the IPO.
   
• The last day traction story was true regarding the overall IPO subscription ratio also. The subscription ratio overall moved from 49.96X to 168.25X on the last day of the IPO.

With the IPO closed for subscription at the end of December 13th, 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 14th December 2023 while the refunds would be initiated on 15th December 2023. The shares of Presstonic Engineering Ltd (ISIN - INE0R1601012) would be credited to the demat accounts of eligible shareholders by the close of 15th December 2023 while the stock of Presstonic Engineering Ltd is expected to be listed on 18th December 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.