Shree Karni Fabcom IPO Subscribed 296.43 times

About Shree Karni Fabcom IPO

The stock of Shree Karni Fabcom IPO has a face value of ₹10 per share and it is a book building issue. The price band for the book building issue is set in the range of ₹220 to ₹227 per share. Being a book built issue, the price will be discovered in the above band. Shree Karni Fabcom IPO 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. As part of the fresh issue portion of the IPO, Shree Karni Fabcom Ltd will issue a total of 18,72,000 shares (18.72 lakh shares), which at the upper band of IPO price of ₹227 per share aggregates to fresh fund raising of ₹42.49 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 18,72,000 shares (18.72 lakh shares) which at the upper band IPO price of ₹227 per share will aggregate to overall Shree Karni Fabcom IPO size of ₹42.49 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 93,600 shares. MLB Stock 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 the company currently stands at 96.16%, which will get diluted to 70.07%, post the IPO. The company will use the fresh funds for funding capex at its dyeing unit in Navsari in Gujarat; and to buy new machinery to be installed for manufacturing bags, at its unit in Surat. Part of the funds will also be allocated towards working capital needs. Horizon Management Private Ltd will be the lead manager to the issue, and MAS Services Ltd will be the registrar to the issue. The market maker for the issue is MLB Stock Broking Private Ltd.

Shree Karni Fabcom IPO Final Subscription Status

Here is the final subscription status of the Shree Karni Fabcom IPO as at the close on 11th March 2024.

As can be seen from the above table, the overall Shree Karni Fabcom IPO got subscribed an impressive 296.43 times. The HNI / NII portion led the stakes with 461.58 times subscription, followed by the Retail portion at 330.45 times subscription. The QIB portion of the IPO also got a healthy subscription of 112.94 times. 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 all the three categories of investors; QIB, retail and HNI / NII investors.

Shree Karni Fabcom IPO Allocation Quota for various categories

The issue was open for QIBs, retail investors and the HNI / NII investors. There was a broad quota designed for each of the segments viz. the retail, QIB and the HNI / NII segments. A total of 93,600 shares were allocated as market maker portion to MLB Stock Broking Private Ltd, which will act as the 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.

Data Source: NSE

In the above Shree Karni Fabcom IPO table, the anchor allocation of 5,32,800 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.47% of the issue size to 19.01% of the issue size. The anchor allocation bidding opened on March 05th, 2024 and also closed on the same day. A total of 5,32,800 shares were allocated across 4 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹227 per share (which includes face value of ₹10 per share and premium of ₹217 per share).

The total anchor allocation value was worth ₹12.09 crore. Out of the 4 anchor investors who got allotted 100% of the anchor portion; each of them was allocated a minimum of 18% in the anchor portion. These 4 anchor investors were; Persistent India Growth Fund – Varsu India Growth Story Scheme-I (43.24%), Vikasa India EIF-I Fund – Incube Global Opportunities (20.27%), Vikasa India EIF-I Fund – Zodiac Global Opportunity Fund (18.47%), and Astorne Capital VCC - Arven (18.02%). These 4 anchor investors accounted for 100% of the overall anchor allocation. Out of the anchor shares allocated to investors on March 05th, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to April 11th, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to June 10th, 2024). The allocation of market maker inventory of 5.00% is outside the anchor portion.

How subscription built up for Shree Karni Fabcom 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 Shree Karni Fabcom 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 Shree Karni Fabcom IPO as of the close of the IPO on 11th March 2024.

• The HNI / NII portion got the best subscription in the Shree Karni Fabcom IPO at 461.58 times and it got 11.26 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 330.45 times overall and it got 29.88 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 112.94 times overall and it got just 0.04 times subscribed at the end of the first day.
   
• While the Retail portion and the HNI / NII portion got fully subscribed on the first day of the IOP itself, the QIB portion got fully subscribed only on the third day of the IPO. However, the overall IPO also got fully subscribed on the first day of the IPO itself.
   
• The overall IPO which saw subscription of 296.43 times got subscribed at 17.37 times at the close of the first day of the IPO. Let us now turn to how the last day traction on the IPO subscription played out across categories.
   
• Let us start with the HNI / NII portion. The HNI / NII portion saw the total subscription ratio moving from 37.93X to 461.58X on the last day of the IPO. That is a substantial amount of traction on the last day.
   
• Like the HNI / NII portion, even the retail portion saw very good traction on the last day of the IPO. On the final day of the IPO, the total subscription ratio for retail investors moved from 86.24X to 330.45X on the last day of the IPO.
   
• The strong last day traction was the case in the QIB investors also, which is natural as they see most of the flows on the last day. The QIB portion saw the total subscription ratio moving from 0.71X to 112.94X on the last day of the IPO.
   
• Finally, regarding the overall IPO subscription ratio, the move was obviously strongest on the last day of the 4-day IPO. The overall subscription moved from 51.45X to 296.43X on the last day of the IPO.

Overall, the IPO of Shree Karni Fabcom Ltd saw above median subscription in the SME IPO.

Next steps after the closure of the Shree Karni Fabcom IPO

The issue opened for subscription on 06th March 2024 and closed for subscription on 11th March 2024 (both days inclusive). The basis of allotment will be finalized on 12th March 2024 and the refunds will be initiated on 13th March 2024. In addition, the demat credits are also expected to happen on 13th March 2024 and the stock is scheduled to list on 14th 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 13th March 2024 under ISIN Number (INE0S4Y01010).