The Innova Captab initial public offering (IPO) opened for subscription on December 21 and is set to close on December 26. Investors have shown significant interest, with the IPO being fully booked on the second day of subscription, reaching a subscription status of 3.54 times.
Breaking down the subscription status on day 2, the retail investors’ portion was subscribed 5.02 times, the Non-Institutional Investors (NII) portion saw a subscription of 3.28 times, and the Qualified Institutional Buyers (QIB) portion was booked 1.09 times. The robust response follows the first day’s subscription, where the issue was subscribed 1.41 times, with the retail portion fully booked.
The IPO structure allocates not more than 50% of the shares for Qualified Institutional Buyers (QIB), not less than 15% for Non-Institutional Investors (NII), and a minimum of 35% for Retail Investors. The offering consists of a fresh issuance of equity shares amounting to ₹320 crore and an offer-for-sale (OFS) of up to 55,80,357 equity shares by the promoter and selling shareholders, each having a face value of ₹10 per equity share.
However, potential investors are urged to consider certain key risks associated with the IPO:
1. **Recent Acquisition:** The acquisition of Sharon poses uncertainty regarding the realization of expected benefits, which could materially impact business, operational results, cash flows, and financial condition.
2. **Manufacturing Risks:** The company’s business heavily relies on manufacturing facilities, exposing it to risks such as equipment breakdown, industrial accidents, severe weather conditions, and natural disasters.
3. **Compliance Challenges:** Failure to comply with quality requirements and technical specifications may lead to business loss and impact overall business, operations, and financial condition.
4. **Financial Estimates:** The funding requirements and proposed deployment of net proceeds are based on management estimates, subject to change based on factors beyond the company’s control.
5. **Capital Intensity:** The company has incurred significant capital expenditure, and the need for substantial financing may affect its ability to grow and future profitability.
6. **Dependency on China:** Raw material supplies from China expose the company to political, economic, and social conditions in the region.
7. **Capital Intensive Nature:** Being a capital-intensive business, insufficient cash flows or inability to borrow may adversely affect operations and financial condition.
8. **Regulatory Compliance:** The company is obligated to transfer, obtain, renew, or maintain statutory permits, licenses, and approvals, and any delay in these processes could adversely affect business operations.
9. **Product Liability:** Risks associated with product defects leading to rejection and consequential claims and product liability costs could impact the company’s reputation and financial condition.
10. **Supply Chain Risks:** Any shortfall in raw material supply or an increase in input costs may affect product pricing, supply, and overall business operations negatively.
Potential investors are advised to carefully consider these risks before subscribing to the Innova Captab IPO and conduct thorough due diligence to make informed investment decisions.
