Agarwal Float Glass India IPO GMP (Grey Market Premium)

Agrawal Float Glass India IPO worth Rs. 9.20 crore, comprises entirely of a fresh issue of the IPO amount. The total SME IPO of Agrawal Float Glass India entails the issue of 21.90 lakh shares at a price of Rs. 42 per share aggregating to Rs. 9.20 crore. The stock has a face value of Rs. 10 and bidders can only bid in minimum lot size of 3,000 share each, entailing a minimum investment of Rs. 126,000 in the IPO. That is also the maximum that a retail investor can apply for in the IPO. In the case of HNI / NII investors, they can bid for a minimum 2 lots of 6,000 shares entailing a minimum investment of Rs. 252,000. As per the terms of the offer, 50% of the net offer is reserved for the retail investors and the balance 50% for HNI / NII investors. It is a fixed price issue and SMC Global Securities will act as the market maker for the SME IPO of Agrawal Float Glass India.

The issue opened for subscription on 10th February 2023 and closes for subscription on 15th February 2023 (both days inclusive). The basis of allotment will be finalized on 20th February 2023 and the refunds will be initiated on 21st February 2023. In addition, the demat credits are expected to happen on 22nd February 2023 and the stock is scheduled to list on 23rd February 2023 on the NSE SME segment. This is the segment, in contrast to the mainboard, where IPOs of small and medium enterprises (SMEs) are incubated. The grey market price (GMP) trading normally starts about 3-4 days prior to IPO opening and continues till the listing date. In the case of Agrawal Float Glass India Ltd, we already have GMP data, which should give a reasonable picture of the likely listing.

There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, especially the liquidity conditions in the market. Secondly, the extent of subscription for the IPO has a deep impact on the GMP as it is indicative of investor interest in the stock. GMP can also technically be in negative, which means the stock would list at a discount to the issue price.

There is one small point to remember here. The GMP is not an official price point, just a popular informal price point. However, in most cases, it has been observed to be a good informal gauge of demand and supply for the IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance of the stock would be.

GMP tends to be a good mirror of the real stock story. More than the actual price, it is the GMP trend over time that gives insights about which direction the wind is blowing. Here is a quick GMP summary for Agrawal Float Glass India IPO, data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 12, fell sharply to Rs. 8, and then drop to Rs. -5. Of course, we have to wait for the actual subscription numbers to flow in when the issue opens for subscription and also watch the progress, as that would have a very significant impact on the GMP. In the past, stocks which got oversubscribed in the IPO also saw a very robust positive shift in the grey market pricing. For a start, Agrawal Float Glass India Ltd has shown good traction in the grey market.

If you consider the price of the IPO of Agrawal Float Glass India Ltd at Rs. 42, then the likely listing price is being signalled at around Rs. 53 per share as per the GMP indicator on 08th February 2023. This is dynamic and keeps changing. One data point to track will be the subscription update on the stock as that would chart the GMP course from here.

The GMP of Rs. 11 on a fixed IPO price of Rs. 42 indicates a listing premium of a healthy 26.19% for Agrawal Float Glass India Ltd over the listing price. That pre-supposes a listing price of approximately Rs. 53 per share, when Agrawal Float Glass India Ltd lists on 23rd February 2023. Of course, these are approximations, so you must keep a margin of safety. However, that would depend on the GMP sustaining over the next few days after the issue opens. The best thing one can do with the GMP is to observe the trend closely as that gives the best hints on listing status. Focus on the time series trend than on numbers.

Agarwal Float Glass India Limited is a 4 year old company engaged in trading of glass and specialized glass products. It procures quality products from manufacturers and sells the same through the sales managers or DWC. The floating glass business began in a different form about 25 years back. Its products find applications in office buildings, hotels, institutions, banks, insurance companies, shopping malls and diplomatic residences. Some of its key products include toughened glass, frosted glass, leaguered glass, figure glass, insulated glass, bullet resistant glass etc.

Agarwal Float Glass India Limited will use the funds for working capital needs of the company. Post the IPO, the promoter share in equity will dilute from 99.99% to 69.77%. The issue is being lead managed by GYR Capital Advisors Ltd. KFIN Technologies Ltd will be the registrars to the issue.