Sheetal Universal IPO oversubscribed by a staggering 179.20 times!

About the Sheetal Universal IPO

Sheetal Universal IPO opened for subscription on 04th December 2023 and closed for subscription on 06th December 2023. The stock of Sheetal Universal Ltd has a face value of ₹10 per share and it is a fixed price issue with the issuer price already fixed at ₹70 per share. Sheetal Universal IPO has only a fresh issue component with no offer for sale (OFS) portion and hence the entire IPO will be EPS and equity dilutive. As part of the fresh portion of the IPO, Sheetal Universal Ltd will issue 34,00,000 shares (34 lakh shares), which at the fixed IPO price of ₹70 per share aggregates to fresh fund raising of ₹23.80 crore. Since there is no offer for sale (OFS) portion, the total size of the fresh issue will also be the total size of the IPO. Hence the overall IPO size will also comprise of 34.00 lakh shares, which at the fixed IPO price of ₹70 per share will aggregate to ₹23.80 crore.

The minimum lot size for the IPO investment will be 2,000 shares. Thus, retail investors can invest a minimum of ₹140,000 (2,000 x ₹70 per share) in the IPO. That is also the maximum that retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 4,000 shares and having a minimum lot value of ₹280,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. Like any SME IPO, the IPO of Sheetal Universal Ltd also has a market making portion with a market maker inventory allocation of 1,72,000 shares. The market maker, Spread X Securities Private Ltd, will provide two-way quotes to ensure liquidity on the counter and low basis costs post listing of the IPO. The promoter holding in the company will get diluted from 95.00% to 66.81% post the completion of the IPO. The fresh issue funds will be used by the company for funding capex plans and for working capital needs. Beeline Capital Advisors Private Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar.

Final subscription status of Sheetal Universal IPO

Here is the subscription status of the Sheetal Universal IPO as at close on 06th December 2023.

As can be seen from the above table, the overall IPO of Sheetal Universal Ltd got subscribed an impressive 179.20 times. The HNI / NII portion led the stakes with 212.55 times subscription, followed by the Retail portion at 129.73 times subscription. There was no QIB portion allocation in the 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 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 1,72,000 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 Sheetal Universal Ltd, there was no QIB portion and hence there was no anchor allocation made. Normally, the anchor allocation is carved out of the QIB portion and it is completed a day ahead of the opening of the IPO. The company did not have any anchor quota for institutional investors in the IPO. The net issue was just net of the market maker portion, which was apportioned equally between the retail investors and the non-institutional investors. The market making portion of 5.06% is independent of the anchor allocation. The anchor portion is carved out of the QIB portion and so the QIB quota available to the public is normally reduced by the anchor size. There is no adjustment in the above allocation, in the absence of any anchor quota.

How subscription built up for the Sheetal Universal IPO?

The oversubscription of the IPO was dominated by the HNI / NII followed by the Retail category and the QIB category in that order. The table below captures the day-wise progression of the subscription status of Sheetal Universal 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 Sheetal Universal Ltd.

• The HNI / NII portion got the best subscription in the Sheetal Universal IPO at 212.55 times and it got 3.56 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 129.73 terms overall and it got 4.79 times subscribed at the end of the first day.
   
• While the retail and HNI / NII portion getting fully subscribed on the first day of the IPO itself, even the overall subscription was filled up on the first day itself, since there was no QIB portion in the IPO. The overall IPO which saw subscription of 179.20 times also got fully subscribed at 4.69 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 14.05X to 212.55X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 23.01X to 129.73X on the last day of the IPO.
   
• Just as the retail portion and the HNI portion saw the best incremental traction on the last day of the IPO, even the overall IPO saw smart traction on the last day with the subscription ratio for the overall IPO moving from 20.54X to 179.20X on the last day.

With the IPO closed for subscription at the end of December 06th, 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 07th December 2023 while the refunds would be initiated on 08th December 2023. The shares of Sheetal Universal Ltd (ISIN - INE04VX01019) would be credited to the demat accounts of eligible shareholders by the close of 08th December 2023 while the stock of Sheetal Universal Ltd is expected to be listed on 11th December 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.