Resourceful Automobile , aYamaha dealership with two showrooms has received an amazing response for its SME IPO.- The company’s IPO has been subscribed over 400 times, receiving bids for over ₹4,700 crore.
- Here’s everything you need to know about the
Resourceful Automobile IPO .
The company, which operates two Yamaha bike showrooms in New Delhi was looking to raise ₹11.99 crore through an initial public offering (IPO). It ended up receiving applications worth over ₹4,760 crore as the IPO has been subscribed over 418 times.
The company received bids for 40.76 crore shares against the offered 10.25 lakh shares. The company had set the share price at ₹117 per share with a lot size of 1,200 shares per application.
The IPO is set to be listed on the BSE SME platform on August 29.
Just eight employees
Resourceful Automobile has just eight employees, three in legal and finance, two in sales, two in operations and one in human resources.A company that operates just two showrooms receiving such a response has resulted in mixed responses from social media, while some are talking about the expected returns, there have been calls for stricter regulation to protect the interests of retail investors.
The company will use the funds raised to open new showrooms, repay debt and meet the working capital requirements.
Analysts had asked to avoid the IPO
Several analysts had recommended users not apply for the IPO as the company operates in a highly competitive segment of two-wheeler dealerships and has been inconsistent in its financial performance.For the year ending February 2024, the company reported a revenue of ₹17.23 crore with a profit of ₹1.52 crore. In March 2023, the company reported a revenue of 19.38 crore and a profit of just 41.5 lakh.
Why did the IPO receive such a response?
While its financials were not strong, one of the reasons for the robust subscription was the high expected return.The company is currently enjoying a grey market premium of ₹85 per share, which is around 73% of its share price.
NSE tightens the norms for SME IPOs
The NSE had already tightened the norms for SME IPOs earlier this month. Starting from September 2024, only companies with positive free cash flow to equity for at least two of the last three financial years will be allowed to list in the SME segment.SEE ALSO:
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