Srivari Spices and Foods IPO: Final Subscription Status

The IPO of Srivari Spices and Foods Ltd closed on Thursday, 09th August 2023. The IPO had opened for subscription on 07th August 2023. Let us look at the final subscription status of Srivari Spices and Foods Ltd at the close of subscription on 09th August 2023. The price band for the IPO was fixed at ₹40 to ₹42 and the stock has a face value of ₹10.

About the Srivari Spices and Foods Ltd IPO

The ₹9.00 crore IPO of Srivari Spices and Foods Ltd comprises entirely of a fresh issue with no offer for sale (OFS) component. The Fresh Issue portion of Srivari Spices and Foods Ltd entails the issue of 21.42 lakh shares which at the upper band of the price range at ₹42 per share aggregates to ₹9.00 crore. The stock has a face value of ₹10 and retail bidders can bid in minimum lot size of 3,000 share each. Thus, the minimum investment of ₹126,000 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 6,000 shares worth ₹252,000 as the bare minimum investment. There is no upper limit for the HNI / NII category or even for the QIB category. Srivari Spices and Foods Ltd will deploy the funds for working capital needs and for general corporate purposes. Post the IPO, the promoter equity in the company will get diluted from 99.90% to 69.94%. The issue is lead managed by GYR Capital Advisors Private Ltd, while Bigshare Services Private 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 09th August 2023.

Final subscription status of Srivari Spices and Foods Ltd

Here is the subscription status of the Srivari Spices and Foods IPO as at close on 09th August 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 QIBs, the retail and the HNI NII. As you can see above, the response has been absolutely phenomenal for the IPO, with strong response across all the segments viz. QIBs, retail and HNI / NII segments.

Allocation quota and anchor placement in the IPO

The table below captures the allocation reservation done for each of the categories out of the total number of shares offered in the IPO. A total of 1,08,000 shares were allocated as market maker portion to Nikunj Stock Brokers 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.

As can be seen, from the above table, the company had allocated 28.29% of its original issue size to anchor investors. The anchor allotment was done on 04th August 2023 and the anchor allocation was spread across just 2 anchor investors. While Neomile Growth Fund – Series I, was allotted 3.66 lakh shares (60.60% of the anchor quota), Zinnia Investment Advisors Private Ltd was allotted 2.40 lakh shares (39.40% of the anchor quota). The anchor allotment was done at a price of ₹42 per share, which is the upper end of the price band for the book building IPO. The anchor portion is adjusted from the overall QIB quota.

How subscription built up for the IPO of Srivari Spices and Foods 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 Srivari Spices and Foods Ltd IPO.

It is clear from the above table that while the retail portion and the HNI / NII portion got substantially oversubscribed on the first day of the IPO itself, the QIB portion got just about fully subscribed on the first day of the IPO and saw most of the traction coming on the last day of the IPO only. However, the overall IPO was fully subscribed on the first day itself by more than 10 times, although most of the traction was seen on the last day. All the 3 categories of investors viz., HNIs / NIIs, retail and QIB categories saw good traction and build up of interest on the last day of the IPO. There is an allocation of 108,000 shares to Nikunj Stock Brokers 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 Srivari Spices and Foods Ltd opened for subscription on 07th August 2023 and closed for subscription on 09th August 2023 (both days inclusive). The basis of allotment will be finalized on 14th August 2023 and the refunds will be initiated on 16th August 2023. In addition, the demat credits are expected to happen on 17th August 2023 and the stock is scheduled to list on 18th August 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 Srivari Spices and Foods Ltd and the SME IPO

Srivari Spices and Foods Ltd, is an SME IPO on the NSE which opened for subscription on 07th August 2023. The company, Srivari Spices and Foods Ltd, was incorporated in the year 2019 to manufacture spices and flour (chakki atta). The company also has a complete marketing network to take care of the after production sales and marketing of the products. Its principal product categories include spices, masala and atta. While its spices get delivered to over 3,000 outlets, its atta gets delivered to more than 15,000 outlets. Its whole wheat and sharbati atta are quote popular in the states of Andhra Pradesh and Telangana. Its production methods are predominantly organic to keep the original flavour of the product intact. It has a direct to customer (D2C) sales model as well as a business to business (B2B) marketing model.

The company has two production facilities at Ranga Reddy district, adjoining Hyderabad. The company has tried to maintain a sustainable model. The raw materials are sourced directly from the farmers and then processed at their manufacturing plants located near Hyderabad. In 2020, the company had expanded its product portfolio to include sambar masala, chicken masala, garam masala and mutton masala. Sourcing the raw materials directly from the farmers gives the company a pricing advantage which is a competitive edge in a crowded market. The company is also looking to expand its products globally, especially in countries with a vast expatriate population, which would be a logical market extension to the domestic market. In terms of revenue contribution, spices contribute 79% of revenues while wheat flour contributes 21%.

Srivari Foods and Spices IPO is being lead managed by GYR Capital Advisors Private Ltd while Bigshare Services Private Ltd is the registrar to the issue.