Deem Roll Tech IPO Subscribed 255.97 times

Deem Roll Tech IPO Subscription Details
Deem Roll Tech IPO Subscription Details

by Tanushree Jaiswal Last Updated: Feb 23, 2024 - 09:45 am 369 Views
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About the Deem Roll Tech IPO

The stock of Deem Roll Tech Ltd has a face value of ₹10 per share and it is a fixed price issue. The price for the book building issue is set at ₹129 per share. Being a fixed price issue, there is no question of price discovery involved in the process. The IPO of Deem Roll Tech 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, Deem Roll Tech IPO will issue a total of 22,68,000 shares (22.68 lakh shares), which at the fixed IPO price of ₹129 per share aggregates to fresh fund raising of ₹29.26 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 22,68,000 shares (22.68 lakh shares) which at the fixed IPO price of ₹129 per share will aggregate to overall IPO size of ₹29.26 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,14,000 shares. SS Corporate Securities 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 holding in the company currently stands at 92.18% and, post-IPO, it will get diluted to 67.12%. The fresh issue funds will be used by the company for funding the capital expenditure of the existing manufacturing facility at Mehsana, Gujarat, and for funding the working capital gaps. Part of the funds raised will also go towards general corporate expenses. Fedex Securities Private Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is SS Corporate Securities Ltd.

Final subscription status of Deem Roll Tech IPO

Here is subscription status of Deem Roll Tech IPO at close on 22nd February 2024.

Investor
Category

Subscription
(times)

Shares

Offered

Shares
bid for

Total Amount
(₹ in crore)

Market Maker

1

1,14,000

1,14,000

1.47

HNIs / NIIs

311.83

10,77,000

33,58,46,000

4,332.41

Retail Investors

179.46

10,77,000

19,32,82,000

2,493.34

Total

255.97

21,54,000

55,13,65,000

7,112.61

Total Applications : 1,93,282 (179.46 times)

As can be seen from the above table, the overall IPO of Deem Roll Tech Ltd got subscribed an impressive 255.97 times. The HNI / NII portion led the stakes with 311.83 times subscription, followed by the Retail portion at 179.46 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 1,14,000 shares were allocated as market maker portion to SS Corporate Securities 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.

Investor Category

Shares Allocated in the IPO

Market Maker Shares

1,14,000 shares (5.02% of the total issue size)

QIB Shares Offered

There is no dedicated QIB allocation in the IPO

NII (HNI) Shares Offered

10,77,000 shares (47.49% of the total issue size)

Retail Shares Offered

10,77,000 shares (47.49% of the total issue size)

Total Shares Offered

22,68,000 shares (100.00% of total issue size)

In the above IPO of Deem Roll Tech Ltd, there is no QIB allocation in the IPO. 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 5.02% 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 Deem Roll Tech IPO

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 Deem Roll Tech Ltd. The IPO was kept open for 3 working days.

Date

NII

Retail

Total

Day 1 (Feb 20, 2024)

1.06

3.50

2.29

Day 2 (Feb 21, 2024)

3.04

12.98

8.02

Day 3 (Feb 22, 2024)

311.83

179.46

255.97

Here are the key takeaways from the subscription numbers on a day-wise basis for Deem Roll Tech IPO.

  • The HNI / NII portion got the best subscription in the Deem Roll Tech IPO at 311.83 times and it got 1.06 times subscribed on the first day of the IPO itself.
     
  • The Retail portion was behind the retail portion in terms of subscription at 179.46 terms overall and it got 3.50 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 255.97 times at close, got fully subscribed at 2.29 times at the close of the first day itself.
     
  • The 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 3.04X to 311.83X on the third and final day of the IPO.
     
  • Like the HNI / NII portion, even the Retail portion saw the best traction on the last day of the IPO. In fact, the retail subscription ratio moved from 12.98X to 179.46X on the last day of the IPO.
     
  • What about the Overall IPO. The last day story was true for the overall IPO also. On the third and final day of the IPO, the subscription ratio overall moved from 8.02X to 255.97X on the last day of the IPO.

Next steps in the IPO process

With the IPO closed for subscription at the end of 22nd 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 23rd February, 2024 and the refunds will be initiated on 26th February, 2024. In addition, the demat credits are also expected to happen on 26th February, 2024 and the stock is scheduled to list on 27th 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 26th February 2024 under ISIN Number (INE586O01011).

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.

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