IRM Energy IPO subscribed 27.05 times

IRM Energy IPO is entirely a fresh issue of shares and has a face value of ₹10 per share. The price band for the book building IPO has been set in the range of ₹480 to ₹505 per share with the final price to be discovered in this band through the process of book building. The entire IPO is a fresh issue and there is no offer for sale (OFS) component in the issue. In the case of IRM Energy IPO, the fresh issue portion entails the issue of 1,08,00,000 shares (1.08 crore shares), which at the upper price band of ₹505 per share will translate into fresh issue size of ₹545.40 crore. In the absence of an OFS the fresh issue will also be the total size of the issue. Hence the overall IPO will also entail the issue of 1,08,00,000 shares (1.08 crore shares), which at the upper price band of ₹505 per share will amount to a total IPO issue size of ₹545.40 crore.

Day-wise story of IPO response

While the QIB portion and the HNI / NII portion picked up traction on the last day, the overall journey was quite slow in the first 2 days of the IPO with most of the action visible on the last day of the IPO only. Interestingly, even the QIB portion got fully subscribed this time around on the first day itself, which normally does not happen. Of course, the retail portion and the HNI  / NII portion also got subscribed on the first day of the IPO itself, although most of the traction across segments was visible only on the last day of the IPO i.e., 20th October 2023. As a result, even the overall IPO got fully subscribed on the first day of the IPO itself, although even here the real traction was visible on the last day only. The table below captures the day-wise progress in IPO subscription.

As can be seen from the above table, the overall IPO got 27.05 times subscribed at the close of the third and final day of the IPO on 20th October 2023. The IPO had been kept open for 3 days in all.

Rapid update on the overall IPO response

The IPO saw fairly steady flows on Day-1 and Day-2, while Day-3 of the IPO saw most of the response to the IPO coming in. The IPO closed with relatively healthy subscription numbers at the close of Day-3. In fact, the company got fully subscribed on the first day of the IPO itself, with all the 3 components viz. QIB portion, HNI / NII portion and the retail portion getting 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, IRM Energy Ltd IPO was subscribed 27.05X overall, with best demand coming from the HNI / NII segment, followed by the QIB 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 well and a lot of the surge of funding applications 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-1 of the IPO itself. Firstly, let us look at the details of overall allocation.

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

As of the close of 20th October 2023, out of the 76.248 lakh shares on offer in the IPO, IRM Energy Ltd saw bids for 2,062.71 lakh shares. This implies an aggregate subscription of 27.05X overall. The granular break-up of subscriptions was in favour of the HNI / NII investors followed by the QIB 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.

It must be noted here that the above allocation is net of the anchor allocation portion, which has already been deducted from the original QIB quota.

Subscription status of QIB Portion

On 17th October 2023, IRM Energy 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 31,75,200 shares were allotted to the anchor investors. The allocation was done at the upper IPO price band of ₹505 per share (including premium of ₹495 per share) which resulted in an overall allocation of ₹160.35 crore. The anchors absorbed 29.40% of the total issue size of ₹545.40 crore.

The QIB portion (net of anchor allocation as explained above) had a quota of 21.17 lakh shares of which it has got bids for 946.76 lakh shares at the close of Day-3, implying a subscription ratio of 44.73X 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 IRM Energy Ltd IPO subscription overall, the actual demand did turn out to be quite robust for the IPO.

Subscription status of HNI / NII Portion

The HNI portion got subscribed 48.34X (getting applications for 767.51 lakh shares against the quota of 15.88 lakh shares). That is a relatively strong 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 to its heft on the last day of the IPO. Apart from the QIB portion, even HNIs saw good traction on the last day.

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 52.29X while the below ₹10 lakh bid category (S-HNIs) got subscribed 40.46X. This is just for information and is already part of the overall HNI bids explained in the previous paragraph.

Subscription status of Retail Individuals

The retail portion was subscribed just 9.29X at the close of Day-3, showing relatively strong appetite. It must be noted that retail allocation is 35% in this IPO. For retail investors; out of the 37.04 lakh shares on offer, valid bids were received for 344.02 lakh shares, which included bids for 291.99 lakh shares at the cut-off price. The IPO is priced in the band of (₹480 to ₹505 per share) and has closed for subscription as of the close of Friday, 20th October 2023.

With the IPO of IRM Energy Ltd closed, here are the next steps prior to the listing process. The basis of allotment will be finalized on 27th October 2023 and the refunds will also be initiated on 27th October 2023. In addition, the demat credits are expected to happen on 30th October 2023 and the stock will list on 31st October 2023 on the NSE and the BSE.