Resourceful Automobile, a company that operates only two Yamaha showrooms in New Delhi and employs just eight people, saw an astonishing 400 times subscription on the final day of its IPO bidding, August 26.
The overwhelming response, combined with a high grey market premium (GMP), has ignited widespread discussions across social media platforms.
According to multiple sources tracking grey market premium (GMP) activities, Resourceful Automobile’s GMP was trading at approximately a 70 percent premium over the issue price in the unlisted market.
The IPO became a viral topic on the social media platform X on August 26, attracting significant attention despite the company’s modest fundamentals.
Opening on August 22, the IPO exceeded all expectations with bids that far surpassed predictions.
Resourceful Automobile operates two Yamaha two-wheeler showrooms under the name “Sawhney Automobiles.”
With an issue size of around Rs 12 crore, the official registrar for the IPO is Cameo Corporate Services.
The IPO is the company’s first public offering.
This IPO is entirely a fresh issue, comprising 10.24 lakh shares, with the bid price set at Rs 117 per share for a lot of 1,200 shares.
According to the company’s red herring prospectus (RHP), the proceeds from the IPO will be used to fund the expansion of its operations, including opening two new showrooms in the Delhi-NCR region, repaying debt, and meeting working capital needs.
A report by Moneycontrol highlighted the significant attention the IPO received despite the company’s limited operational scale.
Traders and retail investors were baffled by the outsized subscription figures for a firm with such a small footprint.
The report noted that several voices on X questioned the logic behind the frenzy. One trader, Akshay Jogani, expressed his disbelief, tweeting, “Resourceful Automobile SME IPO is crazy. Two Yamaha dealership showrooms, eight 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. Is no one asking what the terminal value of two dealership showrooms and eight employees is?”
Another trader, Mr. X, cautioned against jumping on the bandwagon, posting, “Avoiding #ResourcefulAutomobile IPO. Operates 2 Showrooms, sells Yamaha two-wheelers under the brand name Sawhney Automobile. Only has 8 employees. Current GMP at 73% (looks fabricated).”
For the period ending October 31, 2023, Resourceful Automobile reported a negative cash flow of Rs 19.33 lakh from its operating activities.
Resourceful Automobile IPO Allotment
Shares of Resourceful Automobile were allotted to successful bidders on Tuesday after the IPO received an overwhelming response, with subscriptions reaching 400 times on the final day of bidding.
The allotment will be announced on the official website of Cameo Corporate Services.
Bidders can also check their allotment status on the BSE website.
Resourceful Automobile specialises in the sale and servicing of Yamaha motorcycles and scooters, operating with a small team of eight employees across two showrooms in Delhi. Of these employees, three handle finance and legal affairs, two focus on sales and marketing, one manages HR and administration, and the remaining two are dedicated to operations.
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