Resourceful Automobile’s 12 cr IPO was oversubscribed 419 times | IPO news

The SME IPO was subscribed 10.35 times on day 1 and 74.13 times on day 2.

Overall, the non-institutional investor category subscribed 315.61 times, while retail investors showed even more enthusiasm, subscribing 496.22 times.

VK Vijayakumar, chief investment strategist at Geojit Financial Services, said the demand for IPOs for SMEs has become absurd. In anticipation of the increase in the list, the flow is dizzying, despite the quality of the paper. The oversubscription leads to a huge share appreciation, which continues to depress the share price as demand remains high after the listing.

“We can expect that kind of enthusiasm to fade over the medium term as stock market growth strengthens,” he added.

This frenzy has come despite regulators raising concerns about the risks associated with investing in small and medium-sized enterprises (SMEs).

On Friday, Sebi’s whole-time member Ashwani Bhatia asked chartered accountants to be more diligent while auditing companies listed on SME exchanges.

In March, Sebi chairman Madhabi Puri Buch had flagged concern over “price manipulation” in the listing and trading of the SME platform and asked investors to be cautious.

Resourceful Automobile’s public issue comprised 10.25 crore shares priced at Rs 117 each, aggregating to an issue size of Rs 11.99 crore, according to the draft prospectus.

The company plans to use the proceeds for expanding operations by opening new showrooms in Delhi/NCR, repaying debt, meeting incremental working capital requirements and general corporate purposes.

As of December 28, 2023, the company operates through its network of 2 showrooms and has a total of 8 employees, the projects state.

The company’s shares are to be listed on the BSE’s SME platform.

First publication: August 27, 2024 | 18:54 IST