Sadhav Shipping IPO Closing Subscribed 135.69 times

About the Sadhav Shipping Ltd IPO

The stock of Sadhav Shipping IPO has a face value of ₹10 per share and it is a fixed price issue. The price for the issue is set at ₹95 per share. Being a fixed price issue, there is no question of price discovery involved in the process. The IPO of Sadhav Shipping Ltd has only a fresh issue component and no offer for sale (OFS) portion. The 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, Sadhav Shipping IPO will issue a total of 40,18,800 shares (40.188 lakh shares), which at the fixed IPO price of ₹95 per share aggregates to fresh fund raising of ₹38.18 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 40,18,800 shares (40.188 lakh shares) which at the fixed IPO price of ₹95 per share will aggregate to overall IPO size of ₹38.18 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 2,02,800 shares. Sunflower Broking 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 stake in Sadhav Shipping Ltd currently stands at 96.44%, which will get diluted to 69.44% post the IPO. The fresh issue funds will be used by the company for part funding capex to purchase additional boats / vessels, repayment, or prepayment of high cost loans and for working capital needs. ISK Advisors Private Ltd will be the lead manager to the issue, and Maashitla Securities Private Ltd will be the registrar to the issue. The market maker for the issue is Sunflower Broking Private Ltd.

Final subscription status of Sadhav Shipping IPO

Here is subscription status of Sadhav Shipping IPO at close on 27th February 2024.

As can be seen from the above table, the overall IPO of Sadhav Shipping Ltd got subscribed an impressive 135.69 times. The HNI / NII portion led the stakes with 184.58 times subscription, followed by the Retail portion at 65.52 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 2,02,800 shares were allocated as market maker portion to Sunflower Broking 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 Sadhav Shipping IPO, there is no QIB allocation in the IPO. That means, there was no anchor allocation portion too. 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 Sadhav Shipping Ltd

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 Sadhav Shipping Ltd. The IPO was kept open for 4 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for Sadhav Shipping IPO.

• The HNI / NII portion got the best subscription in the Sadhav Shipping Ltd IPO at 184.58 times and it got 1.08 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the retail portion in terms of subscription at 65.52 times overall and it got 2.06 times subscribed at the end of the first day.
   
• While the retail portion got fully subscribed on the first day of the IPO itself, the HNI / NII portion also got fully subscribed on the first day of the IPO itself. As a result, the overall IPO also got fully subscribed on the first day  itself.
   
• The overall IPO, which saw subscription of 135.69 times at close, got fully subscribed at 1.57 times at the close of the first day.
   
• The HNI / NII portion saw the best incremental traction on the last day of the IPO. The HNI / NII portion saw the total subscription ratio moving from 5.55X to 184.58X on the last day of the IPO; when most of the corporate and HNI bids came in.
   
• Even the retail portion saw the best incremental traction on the last day of the IPO. The retail portion saw the total subscription ratio move from 13.17X to 65.52X on the last day of the IPO; traversing nearly five-fold on the last day of the IPO.
   
• The last day traction story was true for the overall IPO subscription ratio too. The subscription ratio overall moved from 9.39X to 135.69X on the last day of the IPO, a move that is nearly fifteen-fold on the last day of the IPO.

Next steps in the IPO process of Sadhav Shipping Ltd

With the IPO closed for subscription at the end of 27th February, 2024, 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 28th February, 2024 and the refunds will be initiated on 29th February, 2024. In addition, the demat credits are also expected to happen on 29th February, 2024 and the stock is scheduled to list on 01st March 2024 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated. The demat credits to the demat account to the extent of allotment will happen by the close of 29th February 2024 under ISIN Number (INE0K5H01010).