Motorbike dealer with 8 staffers receives Rs 4.8K cr bids for Rs 12-cr IPO

Resourceful Automobile IPO: The New Delhi-based company specialises in the sale of Yamaha motorcycles and scooters. It runs two showrooms in the national capital under the name 'Sawhney Automobiles'

Resourceful Automobile's SME IPO has taken market observers by surprise after receiving a blockbuster response from investors despite its modest scale. The Delhi-based company sought to raise Rs 12 crore but received bids worth Rs 4,800 crore.

The IPO of the motorbike dealer – which operates two Yamaha showrooms in New Delhi under the name ‘Sawhney Automobiles’ and employs just eight people – was subscribed 418.27 times on the third day of its bidding. The SME IPO was subscribed 10.35 times on Day 1 and 74.13 times on Day 2.

New Delhi-based Swastika Investmart is the merchant banker to the issue. According to BSE data, quoted in a report by The Times of India, there were bids aggregating nearly 40.8 crore shares at the close of the subscription window on Monday evening.

 

Resourceful Automobile IPO

According to the company’s red herring prospectus (RHP), Resourceful Automobile plans to use the IPO proceeds to fund the expansion of its operations, including the opening of two new showrooms in the Delhi-NCR region, debt repayment, and covering working capital needs. The allotment will be announced on August 27 by Cameo Corporate Services.

The high liquidity and oversubscription are particularly baffling for many as Resourceful Automobile reported a negative cash flow of Rs 19.33 lakh from its operating activities for the period ending October 31, 2023.

Resourceful Automobile IPO: Netizens react

In the wake of the Resourceful Automobile IPO frenzy, several netizens turned to X to express their surprise. One user (Viral Nagda) said, “Indian Markets Hit Fever Pitch as Resourceful Automobile’s IPO is Oversubscribed by 200x Despite Negative Cash Flow. #ResourcefulAutomobile sought Rs 12 cr, received Rs 2,400 cr. Despite two years of negative cash flow, the grey market premium soars over 70 per cent.”

Indian Markets Hit Fever Pitch as Resourceful Automobile's IPO is Oversubscribed by 200x Despite Negative Cash Flow#Resourceful Automobile sought ₹12 Cr, received ₹2400 Cr.
Operates 2 Yamaha two-wheeler showrooms under the brand Sawhney Automobile.
Despite two years of…

— Viral Nagda (@I_am_Viraln) August 26, 2024

Another trader, Mr X, wrote, “Avoiding #ResourcefulAutomobile IPO. Operates 2 Showrooms, sells Yamaha two-wheelers under the brand name Sawhney Automobile. Only has 8 employees. Current GMP at 73 per cent (looks fabricated).”

Avoiding #ResourcefulAutomobile IPO

Operates 2 Showroom sells Yamaha two-wheelers under the brand name Sawhney Automobile

Only has 8 employees

Current GMP at 73% (looks fabricated)

Lagta hai biwi ke kharcho ke liye hi ipo uthaya ja raha hai ????????#IPOALERT #ipogmp #smeipo pic.twitter.com/8Uq03gGpCV

— Mr. X (@luysh04042020) August 26, 2024

Yet another X user and investor, Akshay Jogani, wrote, "Resourceful Automobile SME IPO is crazy... Is no one asking what the terminal value of 2 dealership showrooms and 8 employees is?

Resourceful Automobile SME IPO is crazy

2 Yamaha dealership showrooms, 8 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, could hit 300x by day’s end.

Is no one asking what the terminal…

— Akshay Jogani (@kshayjogani) August 26, 2024

About Resourceful Automobile 

Resourceful Automobile specialises in selling Yamaha two-wheelers, including commuter bikes, sports bikes, cruisers, and scooters. Established in 2018, Resourceful Automobile runs two showrooms in New Delhi – one in Dwarka, known as the Blue Square showroom, and another on Palam Road. Both showrooms feature a range of Yamaha products and accessories.

Of its eight employees, three handle finance and legal matters, two manage sales and marketing, one oversees HR and administration, and the remaining two are responsible for operations.