Thaai Casting IPO Subscribed 375.43 times

About the Thaai Casting IPO

The stock of Thaai Casting IPO has a face value of ₹10 per share and it is a book building issue. The price for the book building issue is set in the price band of ₹73 to ₹77 per share. Being a book built issue, the price will be discovered in the above band. The IPO of Thaai Casting Ltd has only a fresh issue component and no offer for sale (OFS) portion. It must be remembered that 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 Thaai Casting IPO will issue a total of 61,29,600 shares (61.296 lakh shares), which at the upper band of IPO price of ₹77 per share aggregates to fresh fund raising of ₹47.20 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 61,29,600 shares (61.296 lakh shares) which at the upper band IPO price of ₹77 per share will aggregate to overall IPO size of ₹47.20 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 3,47,200 shares. Giriraj Stock Broking Private Ltd and Commodity Mandi Private Ltd will be the joint market makers 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 will dilute post the IPO from 86.50% to 63.58%.The fresh issue funds will be used by the company towards capex at its plants and for general corporate purposes. Part of the proceeds will also be used to fund working capital gaps. GYR Capital Advisors Private Ltd will be the lead manager to the issue, and Purva Share Registry India Private Ltd will be the registrar to the issue. The market makers for the issue are Giriraj Stock Broking Private Ltd and Commodity Mandi Private Ltd.

Final subscription status of Thaai Casting IPO

Here is the subscription status of the Thaai Casting IPO as at close on 20th February 2024.

As can be seen from the above table, the overall Thaai Casting IPO got subscribed an impressive 375.43 times. The HNI / NII portion led the stakes with 729.72 times subscription, followed by the Retail portion at 355.66 times subscription. The QIB portion of the IPO also got a healthy subscription of 144.43 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.

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 3,47,200 shares were allocated as market maker portion to Giriraj Stock Broking Private Ltd and Commodity Mandi 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.

In the above Thaai Casting IPO, the anchor allocation of 17,34,400 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.17% of the issue size to 18.87% of the issue size. The anchor allocation bidding opened on February 14th, 2024 and also closed on the same day. A total of 17,34,400 shares were allocated across 2 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹77 per share (which includes face value of ₹10 per share and premium of ₹67 per share).

The total anchor allocation value was worth ₹13.35 crore. A total of 2 anchor investors got allotted 100% of the anchor portion. These 2 anchor investors were; Vikasa India EIF I Fund – Incube Global Opportunities (84.96%) and Silver Stallion Ltd (15.04%). These 2 anchor investors accounted for 100% of the overall anchor allocation. Out of the anchor shares allocated to investors on February 14th, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to March 21st, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to May 20th, 2024). The allocation of market maker inventory of 5.02% is outside the anchor portion.

How subscription built up for the Thaai Casting 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 Thaai Casting 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 Thaai Casting IPO.

• The HNI / NII portion got the best subscription in the Thaai Casting IPO at 729.72 times and it got 2.10 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 355.66 times overall and it got 5.06 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 144.43 times overall and it got exactly 1.04 times subscribed at the end of the first day.
   
• While the QIB portion got fully subscribed on the first day, the retail and HNI / NII portion also got fully subscribed on the first day of the IPO itself. Hence, the overall subscription was also filled up on the first day of the IPO itself. The overall IPO which saw subscription of 375.43 times got subscribed at 3.28 times at the close of the first day of the IPO.
   
• 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 69.31X to 729.72X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 115.95X to 355.66X on the last day of the IPO.
   
• The last day traction story was true for QIBs and the overall IPO also. The QIB portion saw the total subscription ratio moving from 3.63X to 144.43X on the last day of the IPO. Finally, regarding the overall IPO subscription ratio, it also moved from 73.86X to 375.43X on the last day of the IPO.

Overall, the Thaai Casting IPOis among the few SME IPOs in the last one year to have got subscribed more than 350 times and that is a good sign of things to come.

Next steps after the closure of the IPO

The issue opened for subscription on 15th February 2024 and closed for subscription on 20th February 2024 (both days inclusive). The basis of allotment will be finalized on 21st February 2024 and the refunds will be initiated on 22nd February 2024. In addition, the demat credits are also expected to happen on 22nd February 2024 and the stock is scheduled to list on 23rd February 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 22nd February 2024 under ISIN Number (INE0QJL01014).