An SME IPO with only 2 showrooms in Delhi got around ₹4,769 crore worth of bids, leaving investors wondering how the company managed to get this number of bids.
What Happened: Resourceful Automobile which runs two Yamaha showrooms in Delhi and employs only eight people received bids over 400 times the shares on offer in its IPO which closed on Monday.
Resourceful’s SME IPO was a fresh issue where the company sold 10.24 lakh shares for ₹11.99 crore. The issue was priced at ₹117 per share with lot size of 1200. According to BSE’s website, the company received 40.76 crore bids against a cut off of 6.38 crore, making the total amount at ₹4,769.48 crore.
Resourceful’s GMP was reported at ₹105, indicating that stock is expected to list at ₹222, an 89% increase from its issue price. However, it's important to note that while GMPs can provide some insight into market sentiment towards an IPO, they should not be considered as the sole factor for predicting the stock's performance upon listing.
The company’s DRHP shows that it intends to use the proceeds from the IPO to fund the expansion of its operations, including the opening of two new showrooms in the Delhi-NCR region, debt repayment, and covering working capital needs.
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Resourceful opened for subscription on August 22 with August 26, Monday being the last date. The allotment will be decided on August 27 and will be listed on August 29, Thursday.
On X, user Azhar Jafri wrote “A two-wheeler dealership looking to raise 11-12 crores has got interest worth of 4800 crores from investors.”
Another user Akshay Jogani wrote, “Resourceful Automobile SME IPO is crazy 2 Yamaha dealership showrooms, 8 employees. Asking ₹12 Cr, got ~₹2700 Cr in bids. Market cap ~₹31 Cr (at IPO price) on a net worth of ~₹1.5 Cr. Yet 227x subscribed, could hit 300x by day's end. Is no one asking what the terminal value of 2 dealership showrooms and 8 employees is?”
The company in the financial year till February 29, 2024 posted a net profit of ₹1.52 crore compared to net profit of ₹41.40 lakh in FY23. Its revenue declined to ₹16.53 crore from ₹18.83 crore in the previous year.
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