Zetwerk IPO GMP: Rs. 5,012 Crore Issue Closes Today, GMP Slips Before Listing, Should You Bid?

Bengaluru-based Zetwerk Manufacturing Businesses closes its Rs. 5,012.33 crore initial public offering today, October 19, after a lukewarm first two days of bidding. The issue was subscribed only 0.31 times by the end of Day 2, and the grey market premium has cooled to just Rs. 5.

Issue size and structure

The Zetwerk IPO is a book-built issue of Rs. 5,012.33 crore. It combines a fresh issue of 18.75 crore shares aggregating to Rs. 2,830 crore with an offer for sale of 14.45 crore shares aggregating to Rs. 2,182.33 crore. The fresh portion will add capital to the company's balance sheet, while the OFS gives existing shareholders a partial exit. Shareholding is set to rise from about 150.68 crore shares before the issue to about 169.43 crore after it.

Before the issue opened, Zetwerk raised Rs. 2,251.23 crore from 99 anchor investors, allotting 14.90 crore shares at Rs. 151 apiece.

Price band, lot size and key dates

The price band is Rs. 143 to Rs. 151 per share, with a lot size of 99 shares. At the upper end, a retail investor needs a minimum of Rs. 14,949 to apply for one lot. Bidding opened on October 15 and closes today. Allotment is expected to be finalised on October 21, and the shares are tentatively set to list on NSE and BSE on October 23. The issue also reserves up to 7,00,000 shares for employees at a Rs. 14 discount to the issue price.

Subscription so far

Demand has been muted. The issue was subscribed 0.31 times overall by 5:07 PM on October 16, the end of Day 2. Retail investors bid for 0.37 times their quota, QIBs (excluding anchors) also stood at 0.37 times, and the NII category was at 0.17 times. The quota split is 75% for QIBs, 15% for non-institutional investors and 10% for retail.

GMP signals a modest listing

The grey market premium was last recorded at Rs. 5 on October 19 at 9:02 AM. Against the upper band of Rs. 151, that points to an estimated listing price of Rs. 156, or a gain of about 3.31%. The GMP has weakened from the higher levels seen at the start of bidding. It is an unofficial indicator and can swing until listing day.

About Zetwerk

Zetwerk calls itself a technology-led global manufacturing platform with a hybrid manufacturing model, a global supplier network and its proprietary Zetwerk OS. It operates more than 20 manufacturing facilities and serves sectors such as electronics, energy, capital goods, aerospace and defence. Its customers include Schneider Electric, Indian Oil, Siemens and Acer.

Should You Bid To this IPO?

ICICI Securities in its IPO has given a Subscribe rating to the IPO stating, "Zetwerk is a technology led manufacturing platform that is positioned as a proxy of increasing domestic manufacturing, along with select global opportunities. The company has built a unique hybrid model that enables it to scale in a relatively asset light manner. Most of the cost is upfront, which shall bring operating leverage to play as the company scales and capacity utilization improves. Growth in manufacturing division and esp. own manufacturing trajectory will play a key role in margin improvement. We assign a SUBSCRIBE rating to the issue. "