Canarys Automation IPO: Closing subscription details

About the Canarys Automations Ltd IPO

The IPO of Canarys Automations Ltd opened for subscription on 27th September 2023 and closed for subscription on 03rd October 2023. The company stock has a face value of ₹2 per share and it is a Book Built issue; with the book building price band set in the range of ₹29 to ₹31 per share. The IPO of Canarys Automations Ltd has only a fresh issue component and no offer for sale (OFS) component. As part of the fresh issue portion of the IPO, Canarys Automations Ltd will issue a total of 1,51,72,000 shares (151.72 lakh shares). At the upper band of the IPO price of ₹31 per share, the fresh issue portion aggregates to ₹47.03 crore. Since there is no offer for sale portion, the fresh issue will also be the total size of the issue. Thus, the overall IPO will also entail the issue of 1,51,72,000 shares (151.72 lakh shares) with an IPO value of ₹47.03 crore.

The minimum lot size for the IPO investment will be 4,000 shares. Thus, retail investors can invest a minimum of ₹124,000 (4,000 x ₹31 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 8,000 shares and having a minimum lot value of ₹248,000. There is no upper limit for the QIBs and the HNI / NII investors. The IPO will dilute the promoter holdings from 77.49% to 56.56% post issue. Canarys Automations Ltd plans to use the fresh funds for capex, creation of a new delivery centre and for funding working capital gaps. Indorient Financial Services Ltd will be the lead manager to the issue and Link Intime India Private Ltd will be the registrar. The market maker for the IPO will be Alacrity Securities Ltd.

Final subscription status of Canarys Automations Ltd

Here is the subscription status of the Canarys Automations IPO as at close on 03rd October 2023.

As can be seen from the above table, the overall IPO of Canarys Automations Ltd got subscribed a modest 9.94 times. The HNI / NII portion led the stakes with 14.29 times subscription, followed by the Retail portion at 11.70 times and the QIBs at 2.73 times. That is a very modest response to an SME IPO, especially if you consider the median subscriptions that similar other SME IPOs have got in the past.

Allocation quota for various categories

The issue was open for retail investors, QIBs and for the HNI / NIIs. There was a broad quota designed for each of the segments viz. the QIBs, the retail and the HNI NII. The table below captures the allocation reservation done for each of the categories out of the total number of shares offered in the IPO. A total of 7,60,00 shares were allocated as market maker portion to Alacrity Securities Ltd, which will act as a market maker 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.

As can be seen, from the above table, the company had allocated 32.32 lakh shares or 22.05% of the original issue size to anchor investors. The anchor allotment was done a day ahead of the IPO opening on 26th September 2023 and the entire anchor allocation was spread across 4 anchor investors. The anchor allocation was done at the upper end of the price band at ₹31 per share, which includes share premium of ₹29 per share.

How subscription built up for the IPO of Canarys Automations Ltd

The oversubscription of the IPO was dominated by the HNI / NII category followed by the Retail and the QIB investors in that order. The table below captures the day-wise progression of the subscription status of Canarys Automations Ltd IPO.

It is clear from the above table that none of the categories go fully subscribed in the first two days of the IPO. In fact, the IPO was kept open for a period of 4 days. While the retail portion got fully subscribed on the penultimate third day of the IPO, the QIB portion and the HNI / NII portion got fully subscribed only on the last day of the IPO. Overall, the IPO got just about fully subscribed at the end of the penultimate third day of the IPO. However, all the 3 categories saw bunching of flows on the last day of the IPO. The overall IPO was fully subscribed on the third day of the IPO although most of the traction came on the last day. 

All the 3 categories of investors viz., HNIs / NIIs, retail and QIB categories saw good traction and build-up of interest on the last day of the IPO.  Post the IPO listing, the market maker will offer two way quotes on the stock, using the inventory of shares, and ensure that investors do not have to worry about liquidity and basis risk. The basis of allotment will be finalized on 06th October 2023 while the stock is expected to be listed on 11th October 2023. The listing will happen on the NSE SME segment for small companies, which is in contrast to the mainboard IPO space.