Rs 12 cr IPO of Delhi bike dealer oversubscribed with Rs 4,800 cr bids: Details

Resourceful Automobile, a small bike dealership based in Delhi, has stunned the market by attracting bids worth Rs 4,800 crore for its modest Rs 12 crore IPO. The dealership, which operates two Yamaha showrooms under the name 'Sawhney Automobiles' and has just eight employees, launched its IPO on August 22 with the goal of raising Rs 11.99 crore by offering 10.2 lakh shares at a fixed price of Rs 117 each.

The issue closed on August 26 with an overwhelming response, as investors placed bids for nearly 40.8 crore shares—398 times the shares on offer. Despite the company’s disclosures highlighting several business risks, including potential penal action by the government, related party transactions, high debt, and negative cash flow of Rs 19.33 lakh as of October 2023, the IPO received an unbelievable level of interest.


The IPO's subscription journey saw it being subscribed 10.35 times on the first day, 74.13 times on the second day, and reaching a staggering 418.27 times by the third and final day of bidding. Merchant banker Swastika Investmart, which managed the IPO, reportedly marketed it as a typical SME offering with expectations of moderate subscription levels. However, the final subscription numbers far exceeded all projections.

The company intends to allocate 40 percent of the net proceeds from the IPO towards debt repayment, 30 percent for meeting working capital requirements, and 19 percent for the opening of two new showrooms.

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