The significant increase in the grey market premium for the upcoming public issues that are set to list in the coming weeks is seen as a positive sign for the stagnant public issue market. This boost in the grey market premium indicates renewed interest and enthusiasm among investors, which is encouraging considering that only twelve issues have been observed in the market so far this year, analysts said.
The term 'grey market premium' is used within the realms of IPOs to denote an approximate price at which the stock could potentially be listed.
The Rs 567-crore IdeaForge Technology IPO, which saw huge subscription of over 106 times, recorded the grey market premium on July 4 surging in the range of Rs 535-550 a share, compared to the issue price of Rs 638-672 a share. Cyient DLM Ltd's GMP advanced Rs 120-125 a share from its price band of Rs 250-265 a share. Its IPO got subscribed over 67 times last week and it plans to raise around Rs 592 crore.
Eastern India's leading jewellery retail chain, Senco Gold Ltd, whose IPO will open on July 4, has seen its GMP at Rs 102 a share compared to its issue price of Rs 301-317 a share, traders said. IdeaForge and Cyient IPO will be listed on the exchanges on July 7 and July 10, respectively, while Senco Gold will list on July 14.
HMA Agro Industries Ltd, one of the largest exporters of frozen buffalo meat products, and Mumbai-based PKH Ventures Ltd, recorded their GMP trading marginally higher at Rs 10-12 a share. HMA Agro set its price band at Rs 555-585, while PKH Ventures kept its issue price at Rs 140-148 a share. HMA Agro and PKH Ventures will list on July 4 and July 12.
"The resurgence of primary markets, following a prolonged lull of over a year, has been fuelled by the recent successful listings of Mankind Pharma and Ikio Lighting. These remarkable debuts have revitalised investor sentiment, resulting in overwhelming responses to recently concluded IPOs. With the broader markets scaling lifetime highs, there is a palpable enthusiasm among investors, which may pave the way for a flurry of IPOs if the momentum persists," said Manan Doshi of UnlistedArena.com, which deals in unlisted and pre-IPO shares.
Recently listed Mankind Pharma, the Indian drug manufacturer known for Manforce condoms and Prega News pregnancy test kits, surged over 30 percent on listing day from its price band of Rs 1,026-1,080. The Rs 4,300-crore IPO got subscribed over 15 times. LED lighting solutions provider, Ikio Lighting's Rs 606-crore IPO got over 66 times subscription while its shares debuted over 56 percent premium from its issue price of Rs 270-285 a share.
Eight public issues went listed so far this year, out of which only two - Udayshivakumar Infra Ltd and Radiant Cash Management Services Ltd - traded below their price bands. Udayshivakumar Infra traded 12 percent lower from its issue price of Rs 35 a share, while Radiant Cash Management Services Ltd is 1.4 percent lower from its issue price of Rs 94 a share.
Remaining six IPO's namely -- IKIO Lighting Ltd (trades around 50 percent higher from its price band), Mankind Pharma Ltd (up 58 percent), Avalon Technologies Ltd (up 30 percent), Global Surfaces Ltd (up 40 percent), Divgi TorqTransfer Systems Ltd (up 65 percent) and Sah Polymers Ltd (up 55 percent) -- are trading well above from their issue prices.
"The mood in the frontline secondary market is very optimistic looking at FII’s aggressive inflows and settling down of global macro headwinds followed by better-than-expected domestic microeconomic data like GST collections, lower crude and controlled CPI. Considering cooling down of market headwinds like uncertainty in interest rates and inflation is helping IPO demand to pick up more in H2FY24. I believe the main reason behind higher demand in the grey market would be easy liquidity followed by reasonable ask valuations," said Prashanth Tapse, research analyst at Mehta Equities.
Tapse anticipates that the promoters of major IPOs will continue to exercise caution in the market for a while longer. However, they may witness smaller-sized IPOs with market capitalization ranging between Rs 1,000 crore and Rs 5,000 crore.
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