Adroit Industries' Rs 150.7 crore IPO saw strong demand, reaching full subscription within two hours of opening on September 23. Investors are closely tracking the share issue, with retail participation leading the way ahead of the September 25 closing date.
Adroit Industries witnessed a strong start to its initial public offering on September 23, with the issue being fully subscribed within the first two hours of trading. As of 11:50 am, the National Stock Exchange data showed bids for 11.77 million shares against an offer of 7.87 million. The momentum was largely driven by retail individual investors, who oversubscribed their quota by 2.28 times, while non-institutional investors recorded a subscription rate of 1.65 times.
The Rs 150.7 crore IPO consists of a mix of new shares being issued and an offer for sale by existing promoter entity Mukesh Sangla HUF. Before the public launch, the company secured Rs 45.21 crore from anchor investors, such as Abakkus Venture Opportunities Fund and Chhattisgarh Investments, indicating institutional interest in the company's growth plans.
Usage of IPO Proceeds
A critical part of the IPO is how the company plans to use the money raised. Adroit Industries intends to allocate Rs 63.8 crore toward expanding its manufacturing capacity by installing new machinery and equipment at its plants in Dewas and Pithampur. Additionally, the company plans to use Rs 24.1 crore to reduce debt at its subsidiary, Adroit Driveshafts. For investors, reducing debt is generally viewed as a positive step, as it lowers interest expenses and improves the company’s ability to manage its cash flow. The remaining funds are set aside for general corporate purposes.
Sector Context and Risks
Adroit Industries operates in the auto ancillary space, which manufactures components used by automobile manufacturers. While this sector benefits from the overall growth in vehicle production, it is also exposed to cyclical demand patterns and fluctuations in raw material prices, such as steel and alloys. If demand for vehicles slows down, or if the cost of raw materials rises, the company's profit margins could come under pressure. Furthermore, the company faces execution risk regarding its new capacity expansion plans. Investors should monitor whether the company can successfully deploy the new equipment and scale up production within the projected timeline without facing cost overruns.
Grey Market Sentiment
As of the first day of trading, the stock was seeing an unofficial grey market premium of approximately 20%, which translates to a potential listing gain of about Rs 27 per share over the upper price band of Rs 134. While this indicates high investor interest, the grey market is an unofficial and speculative platform. It does not reflect the official demand or the actual price at which the stock will list on the stock exchanges. The final outcome will depend on the overall subscription status when the issue closes on September 25 and the final demand from institutional investors, who are yet to fully participate in the process.