Atmastco IPO Subscribed 17.61 Times

About the Atmastco IPO

The stock of Atmastco IPO has a face value of ₹10 per share and it is a fixed price issue. The price for the IPO is set at a fixed price level of ₹77 per share. The IPO of Atmastco Ltd has a fresh issue component and an 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 Atmastco IPO will issue a total of 54,80,000 shares (54.80 lakh shares), which at the fixed IPO price of ₹77 per share aggregates to fresh fund raising of ₹42.20 crore. As part of the offer for sale (OFS) portion of the IPO, the issue will entail the sale / offering a total of 18,25,600 shares (18.256 lakh shares), which at the fixed IPO price of ₹77 per share aggregates to total OFS size of ₹14.06 crore. The entire OFS of 18.256 lakh shares will be by the promoter shareholders of the company. Among the promoters, Subramaniam Swaminathan Iyer will 10.954 lakhs shares while Venkataraman Ganesan will offer 7.302 lakh shares in the OFS.

As a result, the overall IPO size will be a combination of the fresh issue and the offer for sale as explained above. Therefore, the overall IPO size will comprise of the issue and sale of 73,05,600 shares (73.056 lakh shares) which at the upper band IPO price of ₹77 per share will aggregate to overall IPO size of ₹56.25 crore. Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 3,66,400 shares. Asnani Stock Brokers 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 Atmastco Ltd  will dilute post the IPO from 97.39% to 68.43%. The fresh issue funds will be used for working capital needs of the company and for repayment / prepayment of some high cost loans. Affinity Global Capital Markes Private Ltd will be the lead manager to the issue, and Cameo Corporate Services Ltd will be the registrar to the issue. The market maker for the issue is Asnani Stock Brokers Private Ltd.

Final subscription status of Atmastco IPO

Here is subscription status of Atmastco IPO at close on 20th February 2024.

As can be seen from the above table, the overall IPO of Atmastco Ltd got subscribed a modest 17.61 times. The Retail portion led the stakes with 18.24 times subscription, followed by the HNI / NII portion at 14.92 times subscription. There was no dedicated QIB allocation in this IPO. That is a very moderate and modest 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 modest to moderate 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 3,66,400 shares were allocated as market maker portion to Asnani Stock Brokers 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.

In the above IPO of Atmastco 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 IPO of Atmastco Ltd

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 Atmastco 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 Atmastco Ltd.

• The Retail portion got the best subscription in the Atmastco Ltd IPO at 18.24 times and it got 2.51 times subscribed on the first day of the IPO itself.
   
• The HNI / NII portion was behind the retail portion in terms of subscription at 14.92 terms overall and it got just 0.42 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 only on the third day of the IPO itself. However, due to the impact of the retail portion, the overall IPO also got fully subscribed on the first day  itself. The overall IPO, which saw subscription of 17.61 times at close, got fully subscribed at 1.47 times at the close of the first day itself.
   
• 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 2.00X to 14.92X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 8.81X to 18.24X on the last day of the IPO.
   
• The last day traction story was true regarding the overall IPO subscription ratio also. The subscription ratio overall moved from 5.41X to 17.61X on the last day of the IPO.

Next steps in the IPO process

With the IPO closed for subscription at the end of 20th 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 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 (INE05DH01017).