The maiden public issue of GNG Electronics saw bumper investor interest on its third day of public bidding. The Rs 460-crore IPO was subscribed nearly 147 times its offer size so far, with Qualified Institutional Buyers (QIBs) booking their reserved portion a whopping 266 times.
The mainboard IPO received bids for more than 208 crore shares, as against the offer size of 1.42 crore shares, according to data on the NSE. Retail investors booked their reserved portion nearly 45 times, while Non Institutional Investors (NII) subscribed the portion kept for them nearly 226 times.
GNG Electronics IPO: Key things to know
The refurbisher of laptops, desktops and other information and communication technology (ICT) devices had launched its public issue to raise Rs 460 crore through a fresh issue of shares worth up to Rs 400 crore, and an offer for sale of 255 crore shares. The company had set a price band of Rs 225-237 for the IPO which remained open for public bidding from July 23 to July 25.
Investors could apply for a minimum of 63 shares, requiring an investment to Rs 14,931, and in multiples thereafter. The allotments will likely be finalized on July 28, and the shares of the company will debut on BSE and NSE on July 30.
GNG Electronics IPO GMP:
Ahead of listing, the unlisted shares of GNG Electronics were trading with a strong grey market premium (GMP) of more than 42 percent over its IPO price at Rs 337 apiece in the grey market, according to data on Investorgain.
According to IPO Watch, the unlisted shares were trading with a GMP of 43 percent in the unofficial market. Notably, this is significantly higher than the grey market estimates of the other three mainboard IPOs which are currently open for public bidding.
GNG Electronics IPO: Should you apply?
Choice Broking has advised investors to subscribe to the public issue for the long term. It noted that the firm is India's largest refurbisher of laptops and desktops and among the largest refurbishers of ICT Devices overall, both globally and in India. It is well positioned to harness global shift to sustainability and growing focus on Environmental, Social, and Governance (ESG), using its strong global supply chain, well-established refurbishing capabilities and state-of-art infrastructure, the domestic brokerage said.
"At a higher price band, GNG is demanding a P/E multiple of 39.1x based on FY25 EPS of Rs. 6.1 and EV/Sales of 1.9x, these valuations appear to be fully priced. While the company benefits from its partnerships with large-format retailers like Vijay Sales, and OEMs such as HP and Lenovo, the sector faces challenges from unorganized players, tightening regulations, and pressure on margins due to the nature of refurbished device pricing. Despite these challenges, GNG’s focus on value-added services, tailored ICT solutions, and organized e[1]waste handling gives it a niche positioning in the market. Growth prospects remain healthy with increased demand for affordable digital devices and sustainability-led practices, though margin expansion may remain limited due to competitive pressures and dependency on large clients. Therefore, considering its niche market position, scalable business model, and long term growth potential, we recommend a ‘Subscribe for Long Term’ rating for the issue," Choice Broking further said.
Bajaj Broking also noted that GNG Electronics is a key Indian player for refurbished IT devices and provides related services globally. The domestic brokerage noted that the company’s FY24 financials indicates a P/E ratio of 51.63.
Anchor book:
A day before the IPO opened for public bidding, GNG Electronics raised Rs 138.13 crore via anchor book on July 22. Total 14 institutional investors participated in the anchor book.
Goldman Sachs, Motilal Oswal Mutual Fund, Mirae Asset, Edelweiss Trusteeship, Buoyant Opportunities Strategy, Bengal Finance, and Founders Collective Fund became the shareholders of the company through investment via anchor book.
Other institutional investors poured in money in GNG are Mint Focused Growth Fund, LC Pharos Multi Strategy Fund, Sameeksha India Equity Fund, Niveshaay Hedgehogs Funds, M7 Global Fund, and Astorne Capital.
The main object of the IPO is to reduce the debt burden. Hence, the Rs 320 crore out of fresh issue proceeds for repaying debt availed by the company and its subsidiary Electronics Bazaar FZC, and the remainder amount will be used for general corporate purposes.
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