What you must know about Vasa Denticity IPO?

Vasa Denticity Ltd, is an SME IPO on the NSE which is opening for subscription on 23rd May 2023. Vasa Denticity was incorporated in 2016 for the marketing and distribution of a comprehensive portfolio of Dental Products. Their product portfolio comprises of consumables, instruments, equipment, and accessories for diagnosing, treating, and preventing dental conditions. Their online portal "Dentalkart.com" looks to improve smiles through its internet platform and mobile based application.

The online channel offered by Vasa Denticity offers 300 domestic and international brands with a comprehensive product range of over 10,000 dental products. It manages logistics through its centralized distribution hub measuring 13000 SFT at Gurugram. Of these, 30 brand or 10% of the brands are proprietary brands of Vasa Denticity. It also has a strong R&D franchise to improve performance of its products. The fresh funds will be used by the company to fund its working capital needs and to also spend on enhancing the brand visibility.

Key terms of the Vasa Denticity SME IPO

Here are some of the highlights of the Vasa Denticity IPO on the SME segment of the National Stock Exchange (NSE).

• The issue opens for subscription on 23rd May 2023 and closes for subscription on 25th May 2023; both days inclusive. The stock is slated to list on the National Stock Exchange on 02nd June 2023.
   
• The company has a face value of ₹10 per share and the IPO will be a book built issue for which the price band has been set in the range of ₹121 to ₹128 per share
   
• The company will issue a total of 42.24 lakh shares, which at the upper end of the book building price band at ₹128 per share will aggregate to total issue size of ₹54.07 crore.
   
• The overall issue will comprise of a fresh issue of 31.74 lakh shares, which at the upper end of the book building price band at ₹128 per share will aggregate to fresh issue portion of ₹40.63 crore.
   
• The overall issue will also comprise of an offer for sale (OFS) portion of 10.50 lakh shares, which at the upper end of the book building price band at ₹128 per share will aggregate to offer for sale (OFS) portion of ₹13.44 crore.
   
• The allocation of shares to the various categories of investors will be as laid out in the table below.

• The minimum lot size for the IPO investment will be 1,000 shares. Thus, retail investors can invest a minimum of ₹128,000 (1,000 x ₹128 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO.
   
• HNI / NII investors can invest a minimum of 2 lots comprising of 2,000 shares and having a minimum lot value of ₹256,000. There is no upper limit on what the HNI / NII investors can apply for. There are no limits prescribed for the QIBs.
   
• Like every SME IPO, this issue also has a market making portion with a market maker portion allocation of 216,000 shares. Hem Securities will act as the market maker to the issue providing two-way quotes to ensure liquidity on the counter.
   
• The company has been promoted by Vikas Agarwal, Sandeep Agarwal and others. The promoter stake in the company stands currently at 95%. Post the IPO, being a fresh issue of shares, the promoter stake will be get diluted proportionately.

While Hem Securities Ltd will also be the lead manager to the issue, MAS Services Ltd will be the registrar to the issue.

Key dates to be aware of in the Vasa Denticity Ltd IPO (SME)

The SME IPO of Quality Foils (India) IPO opens on Tuesday, May 23rd, 2023 and closes on Thursday May 25th, 2023. The Vasa Denticity Ltd IPO bid date is from May 23rd, 2023 10.00 AM to May 25th, 2023 5.00 PM. The Cut-off time for UPI Mandate confirmation is 5 PM on the issue closing day; which is the May 25th, 2023.

It must be noted that in ASBA applications, there is no refund concept. The total application amount is blocked under the ASBA (applications supported by blocked amounts) system. Once the allotment is finalized, only the amount is debited to the extent of the allotment made and the lien on the balance amount is automatically released in the bank account.

Financial highlights of Vasa Denticity Ltd

The table below captures the key financials of Vasa Denticity Ltd for the last 3 completed financial years.

Data Source: Company DRHP filed with SEBI

The profit margins have been fairly low in the previous years, although the sales growth has been quite strong in the last 2 years. However, the company has an established model and the digital leverage should help the company grow business rapidly. However, investors must remember that this is a traditionally low margin business and the overhang on digital stocks is likely to continue for now. That could be an overhang on valuations, so this stock would be best suited to someone with a long term perspective or those with a higher risk appetite.