Arora promoters’ stake will drop to 59.63% in primary IPO

Arora promoters’ stake is set to decline from 91.74% before the primary initial public offering, or IPO, to 59.63% after it, assuming full subscription. The change results from up to 64,40,000 new equity shares being issued while the promoters’ disclosed holding of 1,09,71,678 shares remains unchanged.

How will the primary IPO dilute Arora promoters’ stake?

The primary IPO will dilute Arora promoters’ stake by increasing the company’s share count rather than by disclosing a sale of promoter shares. The company had 1,19,59,382 fully paid-up equity shares before the issue and expects up to 1,83,99,382 shares after issuing up to 64,40,000 shares, each with a face value of rupees 10.

The new shares equal 53.85% of the pre-issue share base of 1,19,59,382 shares. Arora promoters’ disclosed 1,09,71,678 shares therefore fall from 91.74% of pre-issue capital to the stated 59.63% of post-issue capital, a reduction of 32.11 percentage points under the full-subscription assumption.

The offer comprises 3,23,000 shares reserved for the market maker and a net public issue of 61,17,000 shares. A market maker is a registered intermediary that provides two-way buy and sell quotes; MNM Stock Broking Private Limited is to act in that role for a minimum of three years from listing under the disclosed arrangement.

Who holds the Arora promoters’ shares before the issue?

Punit Arora holds 1,05,85,728 shares, or 88.51% of pre-issue capital, and Kumkum Arora holds 3,85,950 shares, or 3.23%. Together, their 1,09,71,678 shares are the promoter holding used in the prospectus’s 59.63% post-issue disclosure.

Ranjana Arora, classified in the promoter group, holds 10 shares described as negligible. The summary shareholding table consequently reports promoter and promoter-group ownership of 1,09,71,688 shares, or 91.74%, while the separate promoter table reports 1,09,71,678 shares; the 10-share difference does not alter the disclosed percentage when rounded to two decimal places.

Ownership is concentrated among three shareholders holding at least 1% each. Punit Arora, Kumkum Arora and Kirti Behal together hold 1,19,59,342 shares, or 99.99% of pre-issue capital, with Kirti Behal holding 9,87,664 shares, or 8.26%; the company reports seven shareholders as of the Red Herring Prospectus date.

Punit Arora’s shareholding was enlarged by a 30:1 bonus issue on March 7, 2024, which allotted 99,27,000 shares to him. His holding subsequently rose by 3,27,868 shares through an April 30, 2025 purchase from Rajasthan Global Securities Private Limited at rupees 61 per share, reaching 1,05,85,728 shares.

Why does the 59.63% post-issue figure matter?

The 59.63% figure shows that Arora promoters remain the largest disclosed shareholder bloc after the primary IPO, despite the increase in outside ownership. The outcome arises because the offer adds shares to the capital base while the promoter share count is not shown as increasing.

Several post-issue ownership columns in the shareholder tables remain blank, but the capital-structure disclosures specify the required share counts. Dividing 1,09,71,678 disclosed promoter shares by 1,83,99,382 projected post-issue shares produces 59.63% after rounding, provided all 64,40,000 offered shares are subscribed.

The prospectus allocates up to 66,000 shares to qualified institutional buyers, not less than 30,15,000 shares to non-institutional investors and not less than 30,36,000 shares to retail individual investors. If a category is undersubscribed, the company may use spill-over from other categories in consultation with the book running lead manager and designated stock exchange, subject to applicable rules.

The ownership percentage is based on a single class of fully paid-up equity shares and no outstanding convertible instruments. The absence of options, warrants, convertible debentures or conversion rights means the disclosed post-issue calculation does not identify an additional potential equity pool.

What lock-ins will apply to Arora promoters’ holding?

Arora promoters must provide a minimum promoter contribution equal to 20.00% of post-issue capital, locked in for three years from allotment under the Securities and Exchange Board of India, or SEBI, Issue of Capital and Disclosure Requirements, or ICDR, Regulations. The prospectus identifies 37,00,000 promoter shares for this lock-in, representing 20.11% of post-offer capital under the full-subscription assumption.

The three-year block includes 33,14,050 shares attributed to Punit Arora’s March 7, 2024 bonus issue. It also includes Kumkum Arora’s 8,000 shares allotted on March 25, 2013, 4,450 shares issued on March 31, 2014 and 3,73,500 shares from the March 7, 2024 bonus issue.

Promoter shares above the minimum contribution are also subject to phased restrictions. The prospectus says up to 36,40,000 shares will be locked in for two years and up to 36,31,678 shares for one year from IPO allotment, representing the two 50% portions of promoter holdings above the minimum contribution.

The prospectus says none of the promoter shares had been pledged as of the Red Herring Prospectus date. It also states that all existing equity shares are in dematerialised form, meaning they are held electronically rather than through physical share certificates.

What could change the 59.63% ownership result?

The 59.63% result depends on full subscription to all 64,40,000 new shares. The company labels the 1,83,99,382 post-issue share total as an assumption of full subscription, so an issue of fewer shares would leave the unchanged promoter holding as a higher percentage of paid-up capital.

The company has undertaken not to make another capital issue, including a bonus issue, preferential allotment, rights issue or other equity issue, between the Red Herring Prospectus date and listing, or until application money is unblocked if the issue fails. This undertaking keeps the disclosed share count fixed during the offer process.

After listing, the company says it has no intention or proposal to alter its capital structure through a split, consolidation or further equity issue within six months of the issue opening. It also says it is in an expansion phase and may issue equity shares or securities convertible into equity after the issue to fund existing or future organic or inorganic expansion, subject to applicable law.

Conclusion

Arora promoters’ stake is projected to decline by 32.11 percentage points because the primary IPO expands the equity base from 1,19,59,382 to up to 1,83,99,382 shares. Punit Arora and Kumkum Arora retain their disclosed share numbers, so the reduction to 59.63% is dilution from new issuance rather than a disclosed promoter sell-down.

The next measure to watch is final subscription and allotment, because the 59.63% ownership figure assumes all 64,40,000 shares are issued. After listing, the disclosed six-month period without a planned capital-structure change and any later equity funding for the company’s stated expansion phase will determine whether the ownership mix changes further.