Saroja Pharma Industries IPO Final Subscription Status

The IPO of Saroja Pharma Industries Ltd closed on Monday, 05th September 2023. The IPO had opened for subscription on 31st August 2023. Let us look at the final subscription status of Saroja Pharma Industries Ltd at the close of subscription on 05th September 2023. It was a fixed price IPO with the price fixed at ₹84 per share and the stock has a face value of ₹10.

About the Saroja Pharma Industries IPO

Saroja Pharma Industries IPO worth ₹9.11 crore comprises entirely of a fresh issue with no offer for sale (OFS) component. The Fresh Issue portion of Saroja Pharma Industries Ltd entails the issue of 10.848 lakh shares which at the fixed IPO price of ₹84 per share aggregates to ₹9.11 crore. The stock has a face value of ₹10 and retail bidders can bid in minimum lot size of 1,600 share each. Thus, the minimum investment of ₹134,400 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 3,200 shares worth ₹268,800 as the bare minimum investment. There is no upper limit for the HNI / NII category or even for the QIB category. Saroja Pharma Industries Ltd will deploy the funds for setting up a manufacturing unit and for repayment of unsecured loans. Post the IPO, the promoter equity in the company will get diluted from 100.00% to 73.02%. The issue is lead managed by Swastika Investmart Ltd, while KFIN Technologies Ltd (formerly Karvy Computershare 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 05th September 2023.

Final subscription status of Saroja Pharma Industries IPO

Here is the subscription status of the Saroja Pharma Industries IPO as at close on 5-September-2023. The retail portion got subscribed 14.83 times with the non-retail portion comprising predominantly of the HNI / NII portion got subscribed 2.90 times. As a result, the overall IPO of Saroja Pharma Industries IPO was subscribed 8.88 times.

The issue was open for retail investors, QIBs and for the HNI / NIIs. There was a broad quota designed for retail and non-retail. The non-retail category comprised predominantly of the HNI / NII investors and to a lesser extent even the QIBs could participate in the IPO. A total of 54,400 shares were allocated as market maker portion to Swastika Investmart 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 of quotas across various categories.

As can be seen, from the above table, the company had not made any allocation to the anchor investors. That is normally done only when there is a dedicated QIB quota, which was no in existence in this case. Normally, the anchor portion is adjusted to the overall QIB quota and only the balance shares are issued to the QIBs as part of the IPO.

How subscription built up for the Saroja Pharma Industries IPO

The oversubscription of the IPO was dominated by the retail followed by the non-retail investors although the overall subscription at 8.88 times can be classified as fairly timid. The table below captures the day-wise progression of the subscription status of Saroja Pharma Industries 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 third day of the IPO of Saroja Pharma Industries Ltd. However, the overall IPO was fully subscribed on the second day itself although most of the traction was seen on the last day. Both the categories of investors viz., HNIs / NIIs and retail categories saw good traction and build up of interest on the last day of the IPO. There is an allocation of 54,400 shares to Swastika Investmart 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 Saroja Pharma Industries Ltd opened for subscription on 31st August 2023 and closed for subscription on 05th September 2023 (both days inclusive). The basis of allotment will be finalized on 08th September 2023 and the refunds will be initiated on 11th September 2023. In addition, the demat credits are expected to happen on 12th September 2023 and the stock is scheduled to list on 13th 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 Saroja Pharma Industries Ltd and the SME IPO

Saroja Pharma Industries Ltd was incorporated in the year 2019 to engage in trading, exports, and supply of Specialty Chemicals and active pharma ingredients (API). The APIs are the intermediate specialized inputs that go into the manufacture of formulations, which we buy at the chemist shops. Broadly, the company deals in 3 categories of products viz. Chemicals, Pharmaceutical Intermediaries and Veterinary Pharma APIs. These APIs were formerly referred to as bulk drugs and constitute the principal ingredients used in making finished dosages in the form of capsules, tablets, liquids etc. Saroja Pharma Industries Ltd exports to other countries including Egypt, Russia, Jordan, Hong Kong, Singapore, and Pakistan, among others. The company broadly deals in chemicals, pharma APIs and pharma intermediates. Here is a quick look at key products it offers under each category.

Under the specialty chemicals category, Saroja Pharma Industries Ltd offers liquid bromine, ethyl acetate, thionyl chloride, and benzyl chloride. Under the Pharma API category, Saroja Pharma Industries Ltd offers; Oxyclozanide BP VET, Bromhexine HCL BP grade, Triclabendazole, Fenbendazole BP VET, Nitroxinil BP VET, Oxfendazole BP VET, Albendazole USP, Rafoxanide BP VET and Febantel EP. Under pharma intermediates, the company offers N-[(4s,6s)-6-methy1-7, 7-dioxido-2-sulfamoy1-5, 6-dihydro-4hthieno[2,3-b]thiopyran-4yl) acetamide and para nitro phenol. Some of the major strengths that the company brings to the table include experienced promoters with a credible track record, a respect management team, highly scalable business model at moderate cost, a wide range of diverse product offerings and a well spread out business operation and revenue base in order to reduce the risk of the business overall.

The company has been promoted by Biju Gopinathan Nair and Manish Dashrath Kamble. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares, the promoter equity holding share will get diluted proportionately to 73.02%. The fresh issue funds will be used by the company for setting up a new manufacturing unit and also for repayment of some its high cost unsecured loans taken. Part of the fund raising will also go towards general corporate expenses. While Swastika Investmart 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 also Swastika Investmart Ltd.