Kody Technolab IPO Final Subscription Details

The IPO of Kody Technolab Ltd closed on Wednesday, 20th September 2023. The IPO had opened for subscription on 15th September 2023. Let us look at the final subscription status of Kody Technolab Ltd at the close of subscription on 20th September 2023. It was a fixed price IPO with an IPO price of ₹160 and the stock has a face value of ₹10 per share.

About the Kody Technolab Ltd IPO

The ₹27.52 crore IPO of Kody Technolab Ltd comprises entirely of a fresh issue with no offer for sale (OFS) component. The Fresh Issue portion of Kody Technolab Ltd entails the issue of 17.20 lakh shares which at the fixed IPO price of ₹160 per share aggregates to ₹27.52 crore. The stock has a face value of ₹10 and retail bidders can bid in minimum lot size of 800 share each. Thus, the minimum investment of ₹128,000 in the IPO is the base limit. That is also the maximum that a retail investor can apply for in the IPO.

HNIs / NIIs can invest in a minimum of 2 lots of 1,600 shares worth ₹256,000 as the bare minimum investment. There is no upper limit for the HNI / NII category or even for the QIB category. Kody Technolab Ltd will deploy the funds for capex needs to set up a development centre at GIFT City, Gujarat as well as to fund working capital expenses. Post the IPO, the promoter equity in the company will get diluted from 100.00% to 73.01%. The issue is lead managed by Beeline Capital Advisors Private Ltd, while KFIN Technologies  Ltd will be the registrars to the issue. Let us now turn to the final subscription details of the IPO as of the close of subscription on 20th September 2023.

Final subscription status of Kody Technolab Ltd

Here is the subscription status of the Kody Technolab IPO as at close on 20th September 2023.

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 retail and the non-retail; with the latter segment comprising predominantly of the HNI / NII segment and to a smaller extent of the QIB segment. A total of 86,400 shares were allocated as market maker portion to Spread X 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. The table below captures the allocation reservation done for each of the categories out of the total number of shares offered in the IPO.

As can be seen, from the above table, the company has not made any allocation for anchor investors. Hence there was no anchor allocation ahead of the IPO opening date. Out of the total issue available, 5.02% of the shares were set aside for the market maker inventory to provide liquidity and two-way quotes post listing. The balance number of shares (called the net offer to public) was equally distributed between the retail investors and the non-retail investors. The non-retail predominantly includes the HNI / NII investors and to a lesser extent the corporates and QIBs too. The anchor portion is normally adjusted to the overall QIB quota, in the event of anchor allocation.

How subscription built up for the IPO of Kody Technolab Ltd

The oversubscription of the IPO was dominated by the HNI / NIIs followed by the retail investors and the QIB investors in that order. The table below captures the day-wise progression of the subscription status of Kody Technolab Ltd IPO.

It is clear from the above table that while the retail portion got fully subscribed on the first day of the IPO itself, the HNI / NII portion got fully subscribed only on the second day of the IPO, with the HNI / NII (non-retail) segment seeing a lot of traction on the last day of the IPO closing. However, the overall IPO was fully subscribed on the first day itself although most of the traction was seen on the last day. Both the categories of investors viz., HNIs / NIIs and retail investor categories saw good traction and build-up of interest on the last day of the IPO. There is an allocation of 86,400 shares to Spread X Securities Ltd for market making. The market maker offers two way quotes on the stock post listing using the inventory of shares and ensures that investors do not get overly worried about liquidity and basis risk in the early stages.

The IPO of Kody Technolab Ltd opened for subscription on 15th September 2023 and closed for subscription on 20th September 2023 (both days inclusive). The basis of allotment will be finalized on 25th September 2023 and the refunds will be initiated on 26th September 2023. In addition, the demat credits are expected to happen on 27th September 2023 and the stock is scheduled to list on 28th September 2023 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated.

A quick word on Kody Technolab Ltd and the SME IPO

Kody Technolab Ltd was incorporated in 2017 to engage in the business of providing software development services for an array of different industries. Most of its software stack are in the more modern and growing versions of the IT industry. Its technology stack includes staff augmentation, ML (machine learning) development, AR (augmented reality) development and maintenance, enterprise mobility, CX strategy and design etc. To sum it up, the company offers the complete package of digital transformation and hand holds the customer through the life cycle of the digital transformation process. Apart from the above, it also offers artificial intelligence (AI) robotics, IT consulting, Web App development and focused IOT (internet of things) support systems, as part of the technology stack.

The IT industry in India has traversed through 3 phases in the last 15 years. It first transformed from the traditional outsourcing for BFSI (banking, financial services, insurance) IT needs to a more digital environment. The digital environment comprised of SMAC (social media, mobility, analytics, and cloud). Now, Indian IT is mutating to the third stage which is the Digital Plus segment comprising of artificial intelligence, machine learning, Internet of Things, virtual reality, augmented reality etc. It is in this third phase that the company is positioned. It is still a small company with annual revenues of just ₹11 crore but with a high net profit margin of nearly 30%. The company has been profitable for the last two years.

The company was promoted by Manav Patel, Manali Patel and Pooja Patel. The promoter holding in the company currently stands at 100.00%, but post IPO will dilute to 73.01%. The fresh issue funds will be used by the company for capex towards setting up a development centre at GIFT City, Gandhinagar, repayment of loans, working capital expenses of the company and also to meet general corporate expenses. While Beeline Capital Advisors Private Ltd will be the lead manager to the issue, KFIN Technologies Ltd will be the registrar to the issue. The market maker for the issue is Spread X Securities Ltd.