KSH International shares slide after listing below IPO price
What's the story
KSH International Ltd's shares fell sharply in early trade today, after a lackluster debut on the stock exchanges. The Pune-based manufacturer of magnet winding wires debuted at ₹370 per share on both the National Stock Exchange (NSE) and Bombay Stock Exchange (BSE), approximately 3.65% lower than its IPO price of ₹384. The stock further extended its losses in early trading, hitting a low of ₹354 (nearly 8% below issue price).
IPO specifics
KSH International's IPO details and market response
KSH International's ₹710-crore initial public offering (IPO) was priced at ₹365-384 per share. The issue comprised a fresh issue of ₹420 crore and an offer-for-sale (OFS) of ₹290 crore by promoters. However, the IPO received a lukewarm response from investors with 83% subscription on the last day. Qualified institutional buyers (QIBs) subscribed their portion 1.06 times while retail investors' segment was subscribed 86%. Non-institutional investors (NIIs) category witnessed a tepid response with only 42% subscription.
Size reduction
KSH International's IPO size reduced to meet subscription threshold
To meet the SEBI-mandated minimum 90% subscription threshold, KSH International had to cut its IPO size from ₹710 crore to ₹644.4 crore. The company opted for this option by reducing its offer-for-sale (OFS) size to ₹224.4 crore from ₹290 crore earlier while keeping the fresh issue size intact at ₹420 crore. This move helped cross the 90% mark for IPO subscription.
Fund allocation
KSH International's plans for IPO proceeds utilization
KSH International plans to use ₹226 crore from the net fresh issue proceeds for debt repayment, ₹87 crore for purchasing and installing new machinery at its Supa facility and Unit 2 in Chakan, and ₹8.8 crore for setting up a rooftop solar power plant at the Supa facility. The remaining funds will be allocated to general corporate purposes.