Sansera Engineering IPO: Tepid response from retail investors but QIBs save the day

Sansera Engineering Ltd, which makes components for automotive and aerospace companies, received a lukewarm response from retail investors to its initial public offering even though the overall issue sailed through easily.

The company’s IPO was covered 11.5 times at the end of the third and final day on Thursday, thanks mainly to strong interest from qualified institutional buyers (QIBs). 

The IPO of 1.2 crore shares, excluding anchor investors’ portion, received bids for 13.88 crore shares, stock-exchange data showed. 

The QIB portion was subscribed 26.5 times, as they bid for more than 9 crore shares. Non-institutional investors, which include corporate houses and high-net-worth individuals, bid for 11.4 times the shares reserved for them.

The quota reserved for retail investors was covered only about 3.15 times. 

The retail investors’ response to Sansera’s IPO is weaker than many other issues this year, as a stock market euphoria has prompted thousands of people to invest in companies going public. The IPO of Krsnaa Diagnostics, for instance, had seen strong from retail investors with their quota getting covered 42 times.

But retail investors have been choosier recently. For instance, the retail book of Vijaya Diagnostic Centre Ltd was oversubscribed just 1.2 times and that of online auto marketplace CarTrade was subscribed 2.75 times.

Sansera’s IPO involved a sale of 1.7 crore shares by its promoters and Rohatyn, a private equity firm. This included about 51 lakh shares that anchor investors bought a day before the IPO opened for public bidding.

The overall IPO size is Rs 1,280 crore at the upper end of the Rs 734-744 price band. The company will command a market valuation of Rs 3,800 crore at the upper end of the range.

Sansera began operations almost 40 years ago. It makes components for automotive and aerospace clients that include Bajaj Auto, Yamaha, Honda Motorcycle and Maruti Suzuki.