V R Infraspace IPO Closing subscription 93.41 times

Tanushree Jaiswal Tanushree Jaiswal

Last Updated: 7th March 2024 - 02:16 pm

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About the V R Infraspace IPO

The stock of V R Infraspace has a face value of ₹10 per share and it is a fixed price issue. The price for the IPO has been set at ₹85 per share. Being a fixed price IPO, there is no question of any price discovery in this case. The IPO of V R Infraspace 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 IPO, V R Infraspace will issue a total of 24,00,000 shares (24.00 lakh shares), which at the fixed IPO price of ₹85 per share aggregates to fresh fund raising of ₹20.40 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 24,00,000 shares (24.00 lakh shares) which at the fixed IPO price of ₹85 per share will aggregate to overall IPO size of ₹20.40 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 1,21,600 shares. Spread X Securities 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 promoters hold 100% stake in V R Infraspace , but post the IPO their stake will get diluted to 72.97%. The fresh issue funds will be used to invest in its subsidiary, Narayanan Enterprises Ltd and to meet working capital expenses. Beeline Capital Advisors Private Ltd will be the lead manager to the issue, and Link Intime India Private Ltd will be the registrar to the issue.

Final subscription status of V R Infraspace 

Here is subscription status of V R Infraspace at close on 06th March 2024.

Investor
Category

Subscription
(times)

Shares
Offered

Shares
bid for

Total Amount
(₹ in crore)

Market Maker

1

1,21,600

1,21,600

1.03

HNIs / NIIs

85.21

11,39,200

9,70,68,800

825.08

Retail Investors

90.55

11,39,200

10,31,50,400

876.78

Total

93.41

22,78,400

21,28,25,600

1,809.02

Total Applications : 64,469 (90.55 times)

As can be seen from the above table, the overall IPO of V R Infraspace got subscribed an impressive 93.41 times. The Retail portion led the stakes with 90.55 times subscription, followed by the HNI / NII portion at 85.21 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 1,21,600 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.

Investor Category

Shares Allocated in the IPO

Market Maker Shares

1,21,600 shares (5.07% of the total issue size)

QIB Shares Offered

No QIB allocation has been made in the IPO

NII (HNI) Shares Offered

11,39,200 shares (47.47% of the total issue size)

Retail Shares Offered

11,39,200 shares (47.47% of the total issue size)

Total Shares Offered

24,00,000 shares (100.00% of total issue size)

In the above IPO of V R Infraspace 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 allocation 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 5.07% 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 IPO of V R Infraspace 

The oversubscription of the IPO was dominated by the Retail investors followed by the HNI / NII Investor category in that order. The table below captures the day-wise progression of the subscription status of V R Infraspace . The IPO was kept open for 3 working days.

Date

NII

Retail

Total

Day 1 (Mar 04, 2024)

1.10

8.05

4.58

Day 2 (Mar 05, 2024)

4.49

25.46

14.98

Day 3 (Mar 06, 2024)

85.21

90.55

93.41

Here are the key takeaways from the subscription numbers on a day-wise basis for V R Infraspace .

  • The Retail portion got the best subscription in the V R Infraspace IPO at 90.55 times and it got 8.05 times subscribed on the first day of the IPO.
     

  • The HNI / NII portion was behind the retail portion in terms of subscription at 85.21 times overall and it got 1.10 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 93.41 times at close, got fully subscribed at 4.58 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 4.49X to 85.21X 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 25.46X to 90.55X 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 14.98X to 93.41X on the last day of the IPO.

Next steps in the IPO process

With the IPO closed for subscription at the end of 06th March, 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 07th March, 2024, 2024 and the refunds will be initiated on 11th March, 2024. In addition, the demat credits are also expected to happen on 11th March, 2024 and the stock is scheduled to list on 12th 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 11th March, 2024 under ISIN Number (INE0QQM01017).

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