Market veteran and founder of Capitalmind Deepak Shenoy He said the oversubscription for the IPO should not be taken seriously as it reflects demand for the IPO and not the actual capital raised by the company.
“It’s an SME, with an IPO of Rs 12 crore. Investors’ money stays in your bank account and you can’t get in easily, so you keep the money in your account and bid, if you don’t get allotment, it will just be released and you will continue to earn the interest. So, there is no point in thinking of oversubscription today,” Shenoy said on Twitter.
Resourceful Automobile’s IPO received a strong response from investors with an overall subscription of nearly 400 times at closing.
Shenoy added that the company has raised Rs 2,700 crore. “The money has not even left the bank accounts. If they were to try to raise Rs 2,700 crore, chances are they won’t get anything. People are asking for more because it is a small IPO, period,” he said. Analysts said the recent surge in SME stocks and strong listing gains in some companies are largely due to three key factors — liquidity, FOMO effect and retail participation. “The fear of missing out on quick gains has spurred continued investment in SME IPOs,” said Vaibhav Porwal, co-founder, Dezerv. Shenoy also agreed that record subscription numbers for SME IPOs are a sign of euphoria in the markets.
“While this trend could persist in the near term, risks such as market corrections and regulatory interventions could temper the frenzy in the market. Investors should proceed with caution and focus on fundamentals as SME stocks could correct sharply if sentiment changes,” Shenoy added.
Resourceful Automobile’s IPO is a completely fresh issue of shares of 10.24 lakh shares and through the issue, it plans to raise Rs 12 crore. The company is offering its shares at Rs 117 apiece.
According to the RHP, Resourceful Automobile is engaged in the business of buying, selling and trading in automobiles, cars, trucks, buses, vans, motorcycles, cycle cars, motorbikes, carriages, amphibious vehicles and vehicles suitable for propulsion on land, sea or air or any combination thereof.
For the year ended February 2024, the company reported total revenue of Rs 16.53 crore and net profit of Rs 1.52 crore.
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