ROX Hi-Tech IPO closes at 214.44x, signaling strong investor confidence

About the ROX Hi-Tech IPO

The IPO of ROX Hi-Tech Ltd opened for subscription on 07th November 2023 and closed for subscription on 09th November 2023. The company stock has a face value of ₹10 per share and it is a book building issue. The issue price for the fresh issue IPO has been fixed in the price band of ₹80 to ₹83 per share. Being a book built issue, the final price will be discovered via book building process. The IPO of ROX Hi-Tech Ltd has a fresh issue component as well as an offer for sale (OFS) portion. As part of the fresh issue portion of the IPO, ROX Hi-Tech Ltd will issue a total of 60,17,600 shares (60.18 lakh shares approximately), which at the upper IPO band price of ₹83 per share aggregates to a fresh issue of ₹49.95 crore. The offer for sale (OFS) portion entails the sale of 5,47,200 shares (5.47 lakh shares approximately), which at the upper IPO band price of ₹83 per share aggregates to OFS size of ₹4.54 crore. The OFS is being offered by the promoter shareholders. Consequently, the overall IPO of ROX Hi-Tech Ltd will entail the issue and sale of a total of 65,64,800 shares (65.65 lakh shares approximately), which at the upper IPO band price of ₹83 per share aggregates to an overall IPO size of ₹54.49 crore.

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹132,800 (1,600 x ₹83 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 3,200 shares and having a minimum lot value of ₹265,600. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. Like every SME IPO, this issue also has a market making portion with a market maker portion allocation of 8,48,000 shares. The market maker for the issue is Share India Securities and they will provide two-way quotes to ensure liquidity on the counter and low basis costs post listing. Post the IPO, the promoter stake in the company will get diluted from the current 83.29% to 58.95%. ROX Hi-Tech will use the proceeds of the fresh issue for capex and for setting up network operations centres and a medical automation centre in Chennai, as well as global software delivery centre in Noida. Swaraj Shares and Securities Private Ltd will be the lead manager to the issue, and Purva Share Registry India Private Ltd will be the registrar.

Final subscription status of ROX Hi-Tech Ltd

Here is the subscription status of the ROX Hi-Tech IPO as at close on 09th November 2023.

As can be seen from the above table, the overall IPO of ROX Hi-Tech Ltd got subscribed an impressive 214.44 times. The HNI / NII portion led the stakes with 366.86 times subscription, followed by the Retail portion at 204.02 times subscription. Even the QIB portion got subscribed an impressive 106.25 times overall. That is a very strong and smart 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 categories of investors.

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, the QIB and the HNI / NII segments. A total of 8,48,000 shares were allocated as market maker portion to Share India Securities, which will act as 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.

The anchor allotment is normally done a day ahead of the IPO opening. In the case of ROX Hi-Tech Ltd, the anchor allocation of 15.81 lakh shares comprising 24.06% of the total IPO size was done a day ahead of the IPO opening on 06th November, 2023. The entire allocation was done at the upper end of the price band of ₹83 per share (which comprises of the face value of ₹10 per share and a premium of ₹73 per share). The entire anchor allocation was spread across 4 anchor investors with one of the anchor investors getting 54.01% of the anchor allocation portion, with the balance divided equally among the other three anchor investors. The market making portion of 12.91% is independent of the anchor allocation. The anchor portion is carved out of the QIB portion and so the QIB quota available to the public will be reduced by the anchor size. That has been reflected in the revised allocation in the table above.

How subscription built up for the IPO of ROX Hi-Tech Ltd

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 ROX Hi-Tech Ltd. The IPO was kept open for 3 working days.

Here are the key takeaways from the subscription numbers on a day-wise basis for ROX Hi-Tech Ltd.

• The HNI / NII portion got the best subscription in the ROX Hi-Tech Ltd IPO at 366.86 times and it got 19.82 times subscribed on the first day of the IPO itself.
   
• The Retail portion was behind the HNI / NII portion in terms of subscription at 204.02 terms overall and it got 29.05 times subscribed at the end of the first day.
   
• While the retail and HNI / NII portion getting fully subscribed on the first day of the IPO itself, even the QIB portion got subscription of 7.91 times subscription on the first day itself, while the overall IPO also got fully subscribed at 21.69 times at the close of the first day of the IPO itself.
   
• The QIB, retail and HNI / NII portion saw the best traction on the last day of the IPO. The HNI / NII portion saw the total subscription ratio moving from 13.64X to 366.86X on the last day of the IPO. Even the retail portion saw the total subscription ratio move from 84.89X to 204.02X on the last day of the IPO.
   
• Just as the retail portion and the HNI portion saw the best incremental traction on the last day of the IPO, even the QIB portion saw the last day subscription jump from 8.58X to 106.25X. Similarly, even the overall IPO saw smart traction on the last day with the subscription ratio for the overall IPO moving from 56.59X to 214.4X on the last day.

With the IPO closed for subscription at the end of November 09th, 2023, the next piece of action shifts to the finalization of the basis of allotment and later to the listing of the IPO. The basis of allotment will be finalized on 15th November 2023 while the refunds would be initiated on 16th November 2023. The shares of ROX Hi-Tech Ltd (ISIN - INE0PDJ01013) would be credited to the demat accounts of eligible shareholders by the close of 17th November 2023 while the stock of ROX Hi-Tech Ltd is expected to be listed on 20th November 2023. The listing will happen on the NSE SME segment for small companies, which is distinct from the regular mainboard IPO space.