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15 January 2024

Arrowhead Separation Engineering IPO: A Drying and Cooling Success Story

Forging a Future through Precision Engineering:

Arrowhead Separation Engineering IPO has marked its presence with a fixed price issue of Rs 13.00 crores, offering a fresh issue of 5.58 lakh shares. The bidding phase, spanning from November 16, 2023, to November 20, 2023, concluded with the allotment finalized on Thursday, November 23, 2023. The shares swiftly embraced the BSE SME platform on November 28, 2023.

Strategic Pricing and Investment Parameters:

Priced at ₹233 per share, investors could enter with a minimum lot size of 600 shares, necessitating an investment of ₹139,800. High Net Worth Individuals (HNIs) were required to commit to a minimum of 2 lots (1,200 shares), amounting to ₹279,600.

Market Performance Snapshot:

The stock showcased a robust market presence with an opening at ₹206.60, reaching a high of ₹207.95 and a low of ₹203.50. The closing price stood at ₹206.60. The 52-week performance exhibited resilience, with a high of ₹255.00 (Nov 28, 2023) and a low of ₹180.00 (Dec 14, 2023). The total traded value on January 15, 2024, amounted to 4,200.

IPO Essentials:

- IPO Duration: November 16, 2023, to November 20, 2023
- Listing Date: November 28, 2023
- Face Value: ₹10 per share
- Price Band: ₹233 per share
- Lot Size: 600 Shares
- Total Issue Size: 558,000 shares, aggregating up to ₹13.00 Cr
- Fresh Issue: 558,000 shares, aggregating up to ₹13.00 Cr
- Issue Type: Fixed Price Issue IPO
- Listing At: SME, BSE

Ownership Landscape:

The pre-issue and post-issue shareholding is structured with 1,313,325 shares and 1,871,325 shares, respectively. A market maker portion of 30,000 shares is facilitated by Aryaman Capital Markets.

Reservation Dynamics:

The IPO offered 5.38% to Market Makers, 47.31% to Non-Institutional Investors (NII), and 47.31% to Retail Individual Investors (RII).

- NII: 264,000 (47.31%)
- Retail: 264,000 (47.31%)
- Market Maker: 30,000 (5.38%)

IPO Timeline Highlights:

- IPO Open Date: Thursday, November 16, 2023
- IPO Close Date: Monday, November 20, 2023
- Basis of Allotment: Thursday, November 23, 2023
- Initiation of Refunds: Friday, November 24, 2023
- Credit of Shares to Demat: Tuesday, November 28, 2023
- Listing Date: Tuesday, November 28, 2023
- Cut-off time for UPI mandate confirmation: 5 PM on November 20, 2023

Lot Size Dynamics:

Investors could bid for a minimum of 600 shares and in multiples thereof.

Application	Lots	Shares	Amount
Retail (Min)	1	600	₹139,800
Retail (Max)	1	600	₹139,800
HNI (Min)	2	1,200	₹279,600

About Arrowhead Separation Engineering Ltd:

Established in 1991, Arrowhead Separation Engineering Ltd is a stalwart in manufacturing and designing chemical process equipment, specializing in drying and cooling systems. The product portfolio encompasses Drum Dryer, Rotary Dryer, Flaker System, and Zero Liquid Discharge System (ZLD).
The company operates from its registered office with a manufacturing facility in Nashik, Maharashtra. Employing an outsourcing model, specific manufacturing processes are outsourced to third-party service providers on a job work basis. The clientele spans both domestic and international markets. As of June 30, 2023, the top 5 customers contributed to 96.82% of total revenue.

Financial Snapshot:

As of June 30, 2023:

- Assets: ₹2,180.62 Lakhs
- Revenue: ₹881.71 Lakhs
- Profit After Tax: ₹64.34 Lakhs
- Net Worth: ₹310.41 Lakhs

Key Financial Indicators:

- ROE: 105%
- ROCE: 30.94%
- Debt/Equity: 3.3
- RoNW: 68.75%
- EPS (Rs): 12.88
- P/E (x): 16.95

Objects of the Issue:

The Net Proceeds from the Issue are allocated for:
1. Repayment of Loan from NBFCs
2. Funding Working Capital Requirements
3. General Corporate Purpose
The listing on the Stock Exchange is anticipated to enhance visibility, brand image, and create a public market for Equity Shares in India.

Expert Analysis:

Investors are advised to exercise caution and consider skipping this relatively pricey investment.

IPO Subscription Status:

As of November 20, 2023, the Arrowhead Separation Engineering IPO garnered significant attention with a subscription of 94.79 times. The retail category subscribed 142.30 times, while the NII category subscribed 46.02 times.

Note: All financial figures are in INR (Indian Rupees), and market-related data is as of November 20, 2023.

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