Zetwerk IPO closes fully subscribed, but retail demand lags

Zetwerk’s ₹5,012.3 crore initial public offering closed fully subscribed on its final day, but demand from retail investors fell short of expectations. The B2B manufacturing platform, which serves clients including Siemens Gamesa, Acer India, and the Indian Air Force, received bids for 19.83 crore shares against the 18.51 crore shares on offer, translating to a modest 1.07 times oversubscription, according to BSE data reported by Inc42.

Qualified institutional buyers drove the subscription, bidding for 1.44 times their reserved quota. Non-institutional investors, however, subscribed only 73% of their portion, with bids above ₹10 lakh reaching 91% but those between ₹2 lakh and ₹10 lakh lagging at 36%. Retail investors placed bids for just 51% of their allocated shares, a tepid response that contrasts with the strong anchor book the company secured ahead of the issue. Employees oversubscribed their quota by 1.12 times, bidding for 7.8 lakh shares against the 7 lakh reserved.

The IPO, priced at ₹143-₹151 per share, values Zetwerk at up to ₹25,583 crore, or approximately $2.7 billion at the upper band. The offering included a fresh issue of ₹2,830 crore and an offer for sale of 14.45 crore shares, with existing investors including co-founders Amrit Acharya and Srinath Ramakkrushnan and venture firms Peak XV Partners, Lightspeed, and Accel India trimming their stakes. Anchor investors, which included SBI Mutual Fund, ICICI Prudential, Goldman Sachs, BlackRock, and ADIA, committed ₹2,251.2 crore before the public offering opened.

Zetwerk’s business model combines third-party supplier capacity with its own manufacturing facilities to fulfill orders across sectors such as renewable energy, consumer electronics, aerospace, defense, and industrial automation. The company reported a 55.4% year-on-year increase in operating revenue from continuing operations, reaching ₹4,117.9 crore in the first quarter of fiscal 2026. However, net losses narrowed only marginally to ₹733 crore from ₹1,368.5 crore in the same period last year, with discontinued operations accounting for ₹668.9 crore of the latest quarterly loss.

The uneven demand—particularly from non-institutional and retail investors—may reflect broader investor caution. The IPO proceeds are intended for prepaying and repaying borrowings, as well as funding inorganic growth opportunities, though how these priorities will translate into long-term value remains to be seen.

Zetwerk’s listing, expected on October 23, will test how public markets assess manufacturing-focused platforms. The company’s performance post-listing could offer clues about investor appetite for businesses operating in sectors that require significant capital and face cyclical demand. For now, the mixed subscription figures suggest that while institutional investors see potential, others may be adopting a wait-and-see approach.

Sources: inc42.com · economictimes.indiatimes.com