Adroit Industries IPO Day 3: GMP at 28%, subscription reaches 18.07 times. Should you subscribe?

The initial public offering for Adroit Industries (India) Limited concluded with significant investor enthusiasm, achieving an overall subscription of 18.07 times by the final day of bidding on May 11, 2023. The ₹8.06 crore issue, offered on the NSE Emerge platform for small and medium-sized enterprises, demonstrates continued strong interest in the SME capital market.

Breakdown of Investor Demand

The offering was well-received across investor categories. The portion reserved for non-institutional investors (NII) was subscribed 19.79 times, while the retail investor segment saw demand of 16.36 times. This broad-based interest highlights investor confidence in the company's growth prospects. The fixed-price issue consisted of a fresh issuance of 576,000 equity shares priced at ₹140 each.

Grey Market Indicates Positive Listing

Unofficial market sentiment appears bullish for Adroit Industries' debut. The grey market premium (GMP) was reported at ₹39 per share. This suggests a potential listing price of ₹179, a premium of nearly 28% over the issue price. While the GMP is not an official indicator, it is often watched by investors as a gauge of potential listing day performance.

Business Model and Financial Health

Adroit Industries operates a diversified business model, engaging in the industrial supply of IT hardware and electronic equipment, while also manufacturing and dealing in batteries under its proprietary brand, “Leopower.” The company has shown consistent growth, with its profit after tax increasing from ₹31.33 lakhs in FY21 to ₹63.31 lakhs in FY22. For the period ending December 31, 2022, the company recorded a profit of ₹72.29 lakhs on revenue of ₹1,365.23 lakhs.

Use of IPO Proceeds

The company plans to utilize the net proceeds from the public offering primarily to fund its working capital requirements, which will support its operational expansion. A portion of the funds will also be allocated for general corporate purposes, providing flexibility for future business needs and strategic initiatives.