Arvind and Company Shipping IPO GMP (Grey Market Premium)

Arvind and Company Shipping Agencies IPO opens for subscription on 12th October 2023 and closes for subscription on 16th October 2023; both days inclusive. The company has a face value of ₹10 per share and it is a fixed price issue with the IPO priced at ₹45 per share. The IPO of Arvind and Company Shipping Agencies Ltd has only a fresh issue component with no book built portion. The fresh issue entails the issue of 32,76,000 shares (32.76 lakhs), which at the fixed IPO price of ₹45 per share aggregates to fresh issue fund raising of ₹14.74 crore. Since there is no offer for sale portion, the total size of the fresh issue will also be the total size of the IPO. Therefore, the total IPO size will comprise of 32.76 lakh shares, which at the fixed IPO price of ₹45 per share will aggregate to ₹14.74 crore.

Arvind and Company Shipping Agencies Ltd has appointed Spread X Securities as the market maker for the IPO with a market maker inventory allocation of 1,68,000 shares. The market maker will provide two-way quotes to ensure liquidity and low basis costs. The promoters currently 100.00% in the company, but post the IPO the promoter stake will get diluted to 73.01%. The company will use the fresh funds to meet its upcoming capex expenditure as well as for general corporate purposes. Beeline Capital Advisors Private Ltd will be the lead manager to the issue and Skyline Financial Services Private Ltd will be the IPO registrar.

About the GMP pricing for Arvind and Company Shipping Agencies IPO

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 Arvind and Company Shipping Agencies Ltd, we already have GMP data for the last 2 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.

How has the GMP panned out in last few days

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 Arvind and Company Shipping Agencies IPO for which data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹8, now improved by ₹18. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 12th October 2023 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, Arvind and Company Shipping Agencies Ltd has shown good traction in grey market.

If you consider the fixed IPO price of Arvind and Company Shipping Agencies IPO at ₹45 per share, then the likely listing price is being signalled at around ₹53 per share as per the GMP indicator on 10th October 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.

The GMP of ₹8 on the fixed IPO price of ₹45 per share indicates a listing premium of a healthy 17.78% for Arvind and Company Shipping Agencies Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹53 per share, when Arvind and Company Shipping Agencies Ltd lists on 25th October 2023. Of course, these are purely approximations, so you must keep a margin of safety. One needs to observe the trend of GMP closely as that gives the best hints on listing status. Look at the time series trend than the absolute numbers.

How to apply for the Arvind and Company Shipping Agencies IPO

The minimum lot size for the IPO investment will be 3,000 shares. Thus, retail investors can invest a minimum of ₹135,000 (3,000 x ₹45 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 6,000 shares and having a minimum lot value of ₹270,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

As per the terms of the offer; 5.13% of the total issue size is reserved for the Market Makers, 47.44% of offer size for the HNI / NII investors and the balance 47.43% is reserved for the retail investors. It is a fixed price issue, with the price already fixed at ₹45 per share.

Like in every SME IPO, the IPO of Arvind and Company Shipping Agencies Ltd also has a market maker. The Market maker typically provides buy and sell quotes post listing to ensure liquidity and low basis risk in the stock. In this case, Spread X Securities Ltd will act as the market maker for the SME IPO of Arvind and Company Shipping Agencies Ltd. The company has set aside 1,68,000 shares for the market maker.

The issue opens for subscription on 12th October 2023 and closes for subscription on 16th October 2023 (both days inclusive). The basis of allotment will be finalized on 19th October 2023 and the refunds will be initiated on 20th October 2023. In addition, the demat credits are expected to happen on 23rd October 2023 and the stock is scheduled to also list on 25th October 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.

Read about Arvind and Company Shipping Agencies IPO