The initial public offering (IPO) of Delta Autocorp continued to attract a strong response from the investors during the third and final day of the bidding process. The SME issue was overall subscribed nearly 14 times on day one and ended the second day of IPO with about 60 times subscription.
The Delta Autocorp is selling its shares in the price band of Rs 123-130 apiece. Investors can apply for a minimum of 1,000 shares and its multiples thereafter. It is looking to raise Rs 54.60 crore via IPO, which includes a fresh share sale of 38.88 lakh shares worth Rs 50.54 crore and an offer-for-sale (OFS) of up to 3.12 lakh equity shares.
According to the data, the investors made bids for 47,06,93,000 equity shares, or 172.04 times, compared to the 27,36,000 equity shares offered for the subscription by 2.05 pm on Thursday, January 9, 2025. The three-day bidding for the issue, which kicked off for bidding on Tuesday, January 7, shall conclude today.
The allocation for retail investors was subscribed 212.12 times, while the portion reserved for non-institutional investors (NIIs) saw a subscription of 209.45 times. However, the quota set aside for qualified institutional bidders (QIBs) was subscribed 73.7 times as of the same time.
Incorporated in 2016, Delta Autocorp is engaged in the business of manufacturing and selling 2-wheelers & 3-wheelers EVs. It operates under the brand name 'Deltic', which initially concentrated on developing electric 3-wheelers prototypes, they marked a significant milestone in 2017 with the launch of their first e-Rickshaw, boasting an impressive mileage of over 150 Km.
The grey market premium (GMP) of Delta Autocorp has been holding firm following the strong bidding for the issue. Last heard, the company was commanding a premium of Rs 115-120 per share in the unofficial market, suggesting a listing pop of around 90 per cent for the investors. The GMP stood around Rs 110 on the first day of the bidding.
Brokerage firms are swearing by the rising demand of electric mobility, particularly in the two-wheeler and three-wheeler segments, along with its reasonable valuations of the issue, leaving something on the table for the investors. Also, a strong and experienced management with pan-India penetration is also seen as a major positive for the SME player. Choice Broking, SMIFS and Arihant Capital also have a subscribe rating on the issue.
Delta Autocorp Innovative products, Strategic focus on Bharat (tier-2 and tier-3markets), a robust distribution network, strong financial performance, future growth initiatives through IPO proceeds, cost competitiveness through in-house manufacturing in future, experienced leadership, and a favourable macroeconomic environment, said Exencial Research Partners.
"At the upper band, the issue is valued at a P/E ratio of 24.21 times based on a FY24 Post-issue EPS of Rs 5.37.And based on October 2024 annualized Post-issue EPS of Rs 5.39, the issue is valued at P/E ratio of 24.12 times. Thus, we recommend 'subscribe' to this issue," it said.
For the seven months ended on October 31, 2024, the company reported a net profit of Rs 4.8 crore with a revenue of Rs 45.28 crore. The company reported a net profit of Rs 8.22 crore with a revenue of Rs 81.17 crore for the financial year 2023-24. The company commands a total market capitalization close to Rs 200 crore.
Big players started entering the SME market about a year ago, and they are here to stay. Picking the right companies has shown strong performance, justifying their valuations and potential, said Gupta, who recently closed of Chanakya Opportunities Fund I, a SME-exchange-focused Category II Alternative Investment Fund (AIF). It was launched by StepTrade Share Services in 2023, garnered more than Rs 100 crore corpus.
Ahead of its IPO, Delta Autocorp raised about Rs 15.21 crore from anchor investors. The company has reserved 50 per cent of the net offer for qualified institutional bidders (QIBs), while non-institutional investors (NIIs) have 15 per cent of the net offer allocated towards them. Retail investors will have 35 per cent of reservation in the net offer for them.
Commenting on the strong response for SME IPOs lately, Kresha Gupta, Founder & Director, StepTrade Share Services said that SME IPOs are changing the game for both businesses and investors, opening up fresh opportunities. Stricter rules in the SME space are actually working in favor of everyone. Investors trust the system more because the risks are better managed.
GYR Capital Advisors is the book running lead manager of the Delta Autocorp IPO, while Link Intime India is the registrar for the issue.The market maker for Delta Autocorp IPO is Giriraj Stock Broking. Shares of the company shall be listed on the NSE emerge platform on January 14, Tuesday.