2 Yamaha Showrooms, 8 Employees, ₹12 Crore Asked, ₹2,700 Crore in Bids: Resourceful Automobile’s SME IPO Surprises Investors

Resourceful Automobile’s SME IPO has captured significant attention on social media, sparking discussions and humor due to its surprising demand. Despite having only two Yamaha showrooms and eight employees, the IPO attracted bids worth ₹2,700 crore, a staggering figure compared to the ₹12 crore initially sought. By 7 p.m., the IPO saw bids for 40.76 crore shares against an availability of just 10.24 lakh shares, resulting in nearly 400 times oversubscription. The retail investor segment alone experienced a 496x subscription rate, highlighting the extraordinary demand.

The company, operating under the name “Sawhney Automobiles,” sells and services Yamaha motorcycles and scooters from two showrooms in New Delhi. The funds raised from the IPO, which launched on August 22, will be used to expand operations, repay debts, and meet working capital needs. However, the company’s financials have raised eyebrows, with a negative cash flow of ₹19.33 lakh reported for the period ending October 31, 2023.

This substantial oversubscription has also driven up the grey market premium to an estimated 73%, leading to concerns about speculative trading. Some market observers, like Mr. X, have warned against investing in the IPO due to the company’s modest scale and the perceived inflated grey market premium. Similarly, Viral Nagda highlighted the disconnect between the company’s financial struggles and the overwhelming investor interest, suggesting that the enthusiasm may not be grounded in the company’s fundamentals.

As Resourceful Automobile prepares to list on the BSE SME platform on August 29, with allotment details set to be released on August 27, the market remains divided on whether this surge in interest reflects genuine investor confidence or is merely a speculative bubble.

Source – (Business Today)

Sancheti College

Sancheti College