Arham Technologies IPO GMP (Grey Market Premium)

Arham Technologies IPO worth Rs. 9.58 crore, comprises entirely of a fresh issue of the IPO amount. The total SME IPO of Arham Technologies Ltd entails the issue of 22.80 lakh shares at a price of Rs. 42 per share aggregating to Rs. 9.58 crore. The stock has a face value of Rs. 10 and retail bidders can 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. The HNI Investor can apply for a minimum of 2 lots comprising of 6,000 shares worth 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 investors. It is a fixed price issue and Nikunj Stock Brokers Limited will act as the market maker for the SME IPO of Arham Technologies Ltd.

The issue has opened for subscription on 05th December 2022 and closes for subscription on 07th December 2022 (both days inclusive). The basis of allotment will be finalized on 12th December 2022 and the refunds will be initiated on 13th December 2022. In addition, the demat credits are expected to happen on 14th December 2022 and the stock is scheduled to list on 15th December 2022 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 4-5 days prior to IPO opening and continues till the listing date. In the case of Arham Technologies Ltd, we already have GMP data for the last 6 days, 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 Arham Technologies Ltd for the 6 days, data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 3, but has then jumped to Rs. 35 and the GMP has virtually grown more than ten-fold in the last 6 days since it first giving price hints through the GMP market. Of course, we have to await 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, Arham Technologies Ltd has shown good traction in the grey market.

If you consider the price of the IPO of Arham Technologies Ltd at Rs. 42, then the likely listing price is being signalled at around Rs. 77 per share as per the GMP indicator on 06th December. 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. 35 on a fixed IPO price of Rs. 42 indicates a listing premium of a healthy 83.33% for Arham Technologies Ltd over the listing price. That pre-supposes a listing price of approximately Rs. 77 per share, when Arham Technologies Ltd lists on 15th December 2022. 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.

Arham Technologies Ltd was incorporated in 2013 and is into the manufacture of LED Smart Televisions. It manufactures different size configurations under the brand name of “STARSHINE”. It operates as an OEM for various TV manufacturers and offers the complete outsourcing solution end to end. The plant is located in Raipur Smart City in the state of Jharkhand. Its supply chain is largely dependent on China so that remains a risk factor.

The fresh funds will be used for predominantly meeting the working capital requirements. Post the IPO, the promoter share in equity will dilute from 100.00% to 73.05%. The issue is being lead managed by Finshore Management Services Ltd. Cameo Corporate Services Ltd will be the registrars to the issue.