Rishabh Instruments IPO subscribed 31.65 times at close

The ₹490.78 crore IPO of Rishabh Instruments Ltd, consisted of a combination of fresh issue and offer for sale. The fresh issue was to the tune of ₹75 crore while the offer for sale (OFS) was worth ₹415.78 crore. The IPO pricing was done in the band of ₹418 to ₹441 with the final price to be discovered through the process of book building. While the QIB portion only picked up traction on the last day, the retail portion and the HNI / NII portion got fully subscribed on the first day of the IPO itself. However, the overall IPO had been fully subscribed only on the second day of the IPO and saw most of the traction build only on the third and final day of the IPO.

Quick update on the overall IPO response

The IPO saw fairly steady response on Day-1 and Day-2 of the IPO and closed with rather healthy subscription numbers at the close of Day-3. In fact, the company had been only 75% subscribed at the close of the first day of the IPO and got fully subscribed only on the second day of the IPO. As per the combined bid details put out by the BSE at the close of Day-3, Rishabh Instruments Ltd IPO was subscribed 31.65X 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 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, as is the norm. Retail portion got fully subscribed on Day-1 and built up very gradually. Firstly, let us look at the details of overall allocation of shares.

As of close of 01st September 2023, out of the 77.90 lakh shares on offer in the IPO, Rishabh Instruments Ltd saw bids for 2,465.26 lakh shares. This implies an overall subscription of 31.65X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors while the retail portion got the lowest subscription among the various categories. 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.

Subscription status of QIB Portion

Let us first talk about the pre-IPO anchor placement. On 29th August 2023, Rishabh Instruments Ltd did an anchor placement with 30% of the IPO size getting absorbed by the anchors. Out of the 1,11,28,858 shares on offer, the anchors picked up 33,38,656 shares accounting for 30% of the total IPO size. The anchor placement reporting was made to the BSE late on 29th August 2023. The IPO of Rishabh Instruments Ltd opened on 30 August 2023 in the price band of ₹418 to ₹441 and closed for subscription on 01st September 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹441 (which comprises of the face value of ₹10 per share and a premium of ₹431 per share). Here are the details of the anchor allocation with the principal subscriber names and quantity absorbed for those with the highest allocation. It is just a cross section.

Data Source: BSE Filings

The QIB portion (net of anchor allocation as explained above) had a quota of 22.26 lakh shares of which it has got bids for 1,614.58 lakh shares at the close of Day-3, implying a subscription ratio of 72.54X 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 Rishabh Instruments 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 31.29X (getting applications for 522.28 lakh shares against the quota of 16.69 lakh shares). That is a very 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 34.01X while the below ₹10 lakh bid category (S-HNIs) got subscribed 25.85X. 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 8.43X at the close of Day-3, showing steady to strong retail appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 38.95 lakh shares on offer, valid bids were received for 328.40 lakh shares, which included bids for 277.50 lakh shares at the cut-off price. In a cut-off bid, the retail investor does not have to bid at any specific price but can just mention the price as cut-off, implying that the final discovered price is acceptable to them. This increases their chances of allotment in the IPO and reduces the chances of bid rejection. However, this facility is only available to retail investors and to S-HNI investors. The cut-off bidding facility is not available to B-HNI investors or to the QIB investors. The IPO is priced in the band of (₹418 to ₹441) and has closed for subscription as of the close of Friday, 01st September 2023.

Brief on the business model of Rishabh Instruments Ltd

Rishabh Instruments Ltd was incorporated in the year 1982 to manufacture, design and develop instruments that are specifically meant for testing and measuring as well as the manufacture of Industrial Control Products (ICP). Rishabh Instruments offers cost-effective methods to measure, control, record, analyse, and optimize energy and processes. In addition, Rishabh Instruments also provides complete aluminium high-pressure die-casting solutions for customers in need of close tolerance fabrication. This finds extensive applications in areas like automotive compressor manufacturing and automation high precision flow meters. These products are also used in machining, and finishing of precision components. Today, Rishabh Instruments Ltd also has a strong footprint in Europe, thanks to the acquisition of Lumel Alucast in 2011. Lumel Alucast is a European non-ferrous pressure casting company which specializes in the manufacture and supply of low-voltage current transformers.

The company also offers the outsourcing of certain manufacturing processes. This includes the manufacturing services like mould design and manufacturing, EMI and EMC testing services, Electronic Manufacturing Services (EMS), and very customized software solutions to enhance the performance of products. Broadly, in terms of business segments, Rishabh Instruments Ltd has 4 key verticals. These verticals include Electrical automation devices, Metering, control, and protection devices, Portable test and measuring instruments, and solar string inverters. Currently, the company has 3 manufacturing plants located in India and it services its local and international clients with the support of over 150 dealers in India and another 270 dealers spread across 70 global locations.

The issue will be lead managed by DAM Capital Advisors (formerly IDFC Securities), Motilal Oswal Investment Advisors and Mirae Asset Capital Markets. KFIN Technologies Ltd (formerly Karvy Computershare Ltd) will be the registrar to the issue. The proceeds of the fresh issue portion will be used to finance the cost of the expansion of the manufacturing facility at Nashik Plant and for general corporate purposes.