Cyient DLM IPO subscribed 67.30 times at close

The ₹592 crore IPO of Cyient DLM Ltd, consisted entirely of a fresh issue for the full amount. There was no offer for sale (OFS) component in the IPO, so the entire funds came in as fresh funds and that happened to be EPS dilutive. The IPO saw fairly steady response on Day-1 and Day-2 of the IPO and closed with very healthy subscription numbers at the close of Day-3. In fact, the company got fully subscribed on the first day of the IPO itself.

As per the combined bid details put out by the BSE at the close of Day-3, Cyient DLM IPO was subscribed at 67.30X overall, with best demand coming from the QIB segment, followed by the retail segment and the HNI / NII segment in that order. In fact, the institutional segment saw some good traction on the last day. The HNI portion did do well with a large number of funding applications coming on the last day of the IPO. Retail portion growth has been steady through all the days with a lot of FOMO action seen on the last day. Here is the IPO original allocation model across categories.

As of close of 30th June 2023, out of the 133.32 lakh shares on offer in the IPO, Cyient DLM Ltd saw bids for 8,973.17 lakh shares. This implies an overall subscription of 67.30X. The granular break-up of subscriptions was in favour of the QIB investors followed by the retail investors and the HNI / NII investors in that order. QIB bids and NII bids typically gather most of the momentum on the last day, and that was the case in this issue also in the case of QIB bids and also the HNI / NII bids. The NII bids picked up substantial momentum on the last day with bulk of the corporate and funding applications coming in on the last day.

Cyient DLM Ltd IPO Subscription Day-3

QIB Portion

Let us first talk about the pre-IPO anchor placement. On 26th June 2023, Cyient DLM Ltd did an anchor placement of 43.79% of the IPO size getting absorbed by the anchors. Out of the 2,23,75,751 shares on offer, the anchors picked up 97,98,113 shares accounting for 43.79% of the total IPO size. The anchor placement reporting was made to the BSE late on 26th June 2023. The IPO of Cyient DLM Ltd opened on 27th June 2023 in the price band of ₹250 to ₹265 and closed for subscription on 30th June 2023 (both days inclusive). The entire anchor allocation was made at the upper price band of ₹265. Let us focus on the anchor allotment portion ahead of the Cyient DLM Ltd IPO. Here are the details of the anchor allocation.

The QIB portion (net of anchor allocation as explained above) has a quota of 69.24 lakh shares of which it has got bids for 6,262.37 lakh shares at the close of Day-3, implying a subscription ratio of 90.44X for QIBs at the close of Day-3. QIB bids typically get bunched on the last day and while the heavy demand for the anchor placement had given an indication of the institutional appetite for the Cyient DLM Ltd IPO subscription overall, the actual demand did turn to be much more robust than expected in the IPO.

HNI / NII Portion

The HNI portion got subscribed 45.05X (getting applications for 1,559.62 lakh shares against the quota of 34.62 lakh shares). That is a rather robust and healthy response at the close of Day-3 largely because this segment normally sees the maximum response bunched on the last day. Bulk of the funded applications and corporate applications, come in on the last day of the IPO, and that was exactly visible as the overall HNI / NII portion added to its heft on the last day. At the end of the day, the HNI portion did see bumper subscriptions.

Now the NII/HNI portion is reported in two parts viz. bids below ₹10 lakhs (S-HNI) and bids above ₹10 lakhs (B-HNI). The bids above the ₹10 lakh category (B-HNIs) typically represents most of the major funding customers. If you break up the HNI portion, the above ₹10 lakh bid category got subscribed 47.62X while the below ₹10 lakh bid category (S-HNIs) got subscribed 39.91X. This is just for information and is already part of the overall HNI bids explained in the previous para.

Retail Individuals

The retail portion was subscribed a healthy 49.20X at the close of Day-3, showing substantial retail appetite. It must be noted that retail allocation is just 10% in this IPO. For retail investors; out of the 23.08 lakh shares on offer, valid bids were received for a total of 1,135.53 lakh shares, which included bids for 929.00 lakh shares at the cut-off price.

Cyient DLM Ltd is a subsidiary of Cyient Ltd, the Hyderabad based technology solutions company. Cyient holds 92.84% in Cyient DLM Ltd while Amansa Investments of Singapore holds the balance 7.16%. The company was incorporated in the year 1993 to provide electronic manufacturing services (EMS). Cyient DLM undertakes these EMS services as Built to Print (B2P) or as Built to Specifications (B2S) services. The latter is a more comprehensive version of the former.

The EMS solutions offered by Cyient DLM comprises of PCBA (printed circuit board assembly), cable harness and box build used in safety systems in aircraft cockpits. Some of its prestigious clients include Honeywell, Thales, and BEL; among others. The Book running lead managers to the IPO are JM Financial and Axis Capital Ltd. KFIN Technologies Ltd will be the registrars to the issue. The IPO is priced in the band of (₹250-₹265) and has closed for subscription as of the close of Friday, 30th June 2023.