Refractory Shapes IPO Oversubscribed by 255.08 Times

About the Refractory Shapes IPO

The stock of Refractory Shapes IPO has a face value of ₹10 per share and it is a book built issue. The price for the book built issue is set in the price band of ₹27 to ₹31 per share. Being a book built issue, the price will get discovered within this price band. The IPO of Refractory Shapes Ltd has only a fresh issue component and no offer for sale (OFS) portion. As part of the fresh issue portion of the IPO, Refractory Shapes Ltd will issue a total of 60,00,000 shares (60 lakh shares), which at the upper band IPO price of ₹31 per share aggregates to fresh fund raising of ₹18.60 crore. Since there is no offer for sale (OFS), the fresh issue size will also double up as the overall IPO size. Therefore, the overall IPO size will also comprise of the issue of 60,00,000 shares (60.00 lakh shares) which at the upper band IPO price of ₹31 per share will aggregate to overall IPO size of ₹18.60 crore.

Like every SME IPO, this issue also has a market making portion with a market maker inventory allocation of 3,04,000 shares. Shreni Shares Ltd will be the market maker and provide two-way quotes to ensure liquidity and low basis costs, post listing. The promoter holding in Refractory Shapes IPO currently stands at 100.00%. However, post the fresh issue of shares in the IPO, the promoter equity holding share will get diluted to 72.48%. The fresh issue funds will be used by the company towards capex for civil construction required for the plant in Wankaner, and for capex for purchase of plant and machinery at Wankaner plant. Shreni Shares Ltd will be the lead manager to the issue, and Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Shreni Shares Ltd.

Final subscription status of Refractory Shapes IPO

Here is the subscription status of the IPO of Refractory Shapes IPO as at close of trading on 09th May 2024.

As can be seen from the above table, the overall IPO of Refractory Shapes Ltd got subscribed an impressive 255.08 times. The HNI / NII portion led the stakes with 464.43 times subscription, followed by the Retail portion at 259.56 times subscription. The QIB portion of the IPO also got a healthy subscription of 90.59 times. That is a relatively strong and robust response to an SME IPO, especially if you consider the median subscriptions that similar other SME IPOs have got in the past. The subscription has shown strong traction for the IPO across all the three categories of investors; QIB, retail and HNI / NII investors; with all categories above the median.

Allocation quota for various categories

The issue was open for QIBs, retail investors and the HNI / NII investors. There was a broad quota designed for each of the segments viz. the retail, QIB and the HNI / NII segments. A total of 3,04,000 shares were allocated as market maker portion to Shreni Shares Ltd, which will act as the market maker inventory 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.

Data Source: NSE

In the above IPO of Refractory Shapes Ltd, the anchor allocation of 3,04,000 shares was carved out of the QIB portion, as a result of which the QIB offer to the public reduced from the original 47.40% of the issue size to 19.07% of the issue size. The anchor allocation bidding opened on May 03rd, 2024 and also closed on the same day. A total of 17,00,000 shares were allocated across 2 anchor investors. The anchor allocation was done at the upper end of the IPO price band of ₹31 per share (which includes face value of ₹10 per share and premium of ₹21 per share).

The total anchor allocation value was worth ₹5.27 crore. These 2 anchor investors were; Next Orbit Ventures Fund (50.12%), and Craft Emerging Market Fund PCC – Citadel Capital Fund (49.88%). These 2 anchor investors accounted for 100% of the overall anchor allocation. Out of the anchor shares allocated to investors on May 03rd, 2024, a lock in of 30 days will be applicable for 50% of the shares (up to June 09th, 2024) and a lock-in of 90 days will be applicable for the remaining shares (up to August 08th, 2024). The allocation of market maker inventory of 5.07% is outside the anchor portion.

How subscription built up for the IPO of Refractory Shapes IPO?

The oversubscription of the IPO was dominated by the HNI / NII followed by the Retail category and the QIB category in that order. The table below captures the day-wise progression of the subscription status of Refractory Shapes Ltd. The IPO was kept open for 4 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for Refractory Shapes Ltd as of the close of the IPO on 09th May 2024.

• The HNI / NII portion got the best subscription in the Refractory Shapes Ltd IPO at 464.43 times and it got 2.73 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 259.56 times overall and it got 8.49 times subscribed at the end of the first day.
   
• The QIB portion was third in the pecking order in terms of subscription at 90.59 times overall and it got 0.01 times subscribed at the end of the first day.
   
• While the Retail portion and the HNI / NII portion got fully subscribed on the first day of the IPO itself, the QIB portion got fully subscribed only on the fourth and final day of the IPO. However, the overall IPO also got fully subscribed on the first day of the IPO itself.
   
• The overall IPO which saw subscription of 255.08 times got subscribed at 4.83 times at the close of the first day of the IPO. Let us now turn to how the last day traction on the IPO subscription played out across categories.
   
• Let us start with the HNI / NII portion. The HNI / NII portion saw the total subscription ratio moving from 35.79X to 464.43X on the last day of the IPO. That is a substantial amount of traction on the last day.
   
• Like the HNI / NII portion, even the retail portion saw very good traction on the last day of the IPO. On the final day of the IPO, the total subscription ratio for retail investors moved from 35.56X to 259.56X on the last day of the IPO.
   
• The strong last day traction was the case in the QIB investors also, which is natural as they see most of the flows on the last day. The QIB portion saw the total subscription ratio moving from 0.07X to 90.59X on the last day of the IPO.
   
• Finally, regarding the overall IPO subscription ratio, the move was obviously strongest on the last day of the 3-day IPO. The overall subscription moved from 40.43X to 255.08X on the last day of the IPO.

Next steps after the closure of the Refractory Shapes IPO

The issue opened for subscription on 06th May 2024 and closed for subscription on 09th May 2024 (both days inclusive). The basis of allotment will be finalized on 10th May 2024 and the refunds will be initiated on 13th May. In addition, the demat credits are also expected to happen on 13th May 2024 and the stock is scheduled to list on 14th May 2024 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated. The demat credits to the demat account to the extent of allotment will happen by the close of 13th May 2024 under ISIN Number (INE0TNX01015).