Honasa Consumer IPO Subscribed 7.61 times

The IPO of Honasa Consumer Ltd opened for subscription on 31st October 2023 and closed on 02nd November 2023. The stock of Honasa Consumer Ltd has a face value of ₹10 per share while the price band for the book building IPO has been set in the band of ₹308 to ₹324. The IPO of Honasa Consumer Ltd was a combination of a fresh issue and an offer for sale (OFS). The fresh issue portion of Honasa Consumer Ltd IPO comprises the issue of 1,12,65,432 shares (112.65 lakh shares approximately), which at the upper price band of ₹324 per share translates into a fresh issue size of ₹365 crore.

The offer for sale (OFS) portion of the IPO of Honasa Consumer Ltd comprised the sale of 4,12,48,162 shares (412.48 lakh shares approximately), which at the upper price band of ₹324 per share will translate into an offer for sale (OFS) size of ₹1,336.44 crore. The overall IPO of Honasa Products Ltd comprised of the issue and sale of 5,25,13,594 shares (525.14 crore shares approximately), which at the upper price band of ₹324 per share translates into total IPO issue size of ₹1,701.44 crore.

How subscriptions evolved in the IPO period?

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was quite slow for the retail investors and for the other categories of investors. In fact, the QIB portion got fully subscribed on the second day of the IPO while the HNI / NII portion and the retail portion got fully subscribed only on the last day of the IPO. Even the overall IPO got fully subscribed on the last day of the IPO only. The IPO remained open for a total period of 3 days. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 7.61 times subscribed at the close of the third and final day of the IPO on 02nd November 2023. The IPO had been kept open for 3 days in all.

Rapid update on the overall IPO response

The IPO saw fairly tepid flows on Day-1 and Day-2, with most of the action visible only on Day-3 of the IPO. However, the IPO did close with relatively modest subscription numbers at the close of Day-3. In fact, the IPO of Honasa Consumer Ltd got fully subscribed only on the last day of the IPO, with none of the categories of investor seeing full subscription on the first day. Even the incremental traction on the last day was only robust in the case of HNI / NII portion and QIB portion, with retail seeing limited traction on the last day of the IPO.

As per the combined bid details put out by the BSE at the close of Day-3, Honasa Consumer Ltd IPO was subscribed 7.61X overall, with best demand coming from the QIB segment, followed by the HNI / NII segment and the retail segment in that order. In fact, the institutional segment and the HNI / NII segments saw some very good traction on the last day. The HNI portion did do too well and most of the surge of funding and corporate applications did come in on the last day of the IPO. Retail portion was relatively timid, although it was fully subscribed on Day-3 of the IPO only. Here is the overall allocation.

Having understood the allocation of shares across various categories, Let us look at how the subscription data played out for the IPO at an overall level and at a more granular level.

As of close of 02nd November 2023, out of the 289.00 lakh shares on offer in the IPO, Honasa Consumer Ltd saw bids for 2,200.38 lakh shares. This implies an overall subscription of 7.61X overall. The granular break-up of subscriptions was in favour of the QIB investors followed by the HNI / NII investors and the retail 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. Both the QIB and the NII bids picked momentum on the last day and added to its heft of the previous days. Here are the details of the category-wise subscription.

Data Source: BSE

Subscription status of QIB Portion

On 30th October 2023, Honasa Consumer Ltd completed the bidding for its anchor allocation. There was a robust response as the anchor investors participated through the process of book building. A total of 2,36,17,228 (236.17 lakh shares approximately) were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹324 per share (including premium of ₹314 per share) which resulted in an overall allocation of ₹765.20 crore. The anchors absorbed 44.97% of the total issue size of ₹1,701.44 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 157.45 lakh shares of which it has got bids for 1,811.35 lakh shares at the close of Day-3, implying a subscription ratio of 11.50X 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 Honasa Consumer Ltd IPO subscription overall, the actual demand did turn to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 4.02X (getting applications for 316.72 lakh shares against the quota of 78.72 lakh shares). That is a relatively modest 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 visible as the overall HNI / NII portion added some heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day. However, the overall numbers for HNIs were still quite tepid at close, in comparison to the median.

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 4.85X while the below ₹10 lakh bid category (S-HNIs) got subscribed 2.36X. This is just for information and is already part of the overall HNI bids explained in the previous para. In the past, it has been observed that for large sized IPOs, there is hesitancy on the part of the IPO financiers, since they expect substantial oversubscription to be able to be more profitable on the lending side.

Subscription status of Retail Individuals

The retail portion was subscribed just 1.35X at the close of Day-3, showing very modest appetite. It must be noted that retail allocation is 10% in this IPO. For retail investors; out of the 52.48 lakh shares on offer, valid bids were received for 70.66 lakh shares, which included bids for 58.51 lakh shares at the cut-off price. The IPO is priced in the band of (₹308 to ₹324 per share) and has closed for subscription as of the close of Thursday, 02nd November 2023.