ASK Automotive IPO GMP (Grey Market Premium)

ASK Automotive IPO opens on 07th November 2023 and closes for subscription on 09th November 2023. The company stock has a face value of ₹2 per share and the price band for the book building IPO has been set in the range of ₹268 to ₹282. The final price will be discovered within this band. The IPO of ASK Automotive Ltd will be entirely an offer for sale (OFS) with no fresh issue component in the IPO. The offer for sale (OFS) portion of the IPO of ASK Automotive Ltd comprises the sale of 2,95,71,390 shares (295.71 lakh shares approximately), which at the upper price band of ₹282 per share will translate into an offer for sale (OFS) size of ₹833.91 crore. The OFS selling will be by the promoter shareholders. Out of the 295.71 lakh shares OFS, promoter Kuldip Singh Rathee will offer 207.00 lakh shares while the other promoter, Vijay Rathee will offer the remaining 88.71 lakh shares in the offer for sale (OFS).

Since there is no fresh issue component, the OFS portion will also double up as the total size of the IPO of ASK Automotive Ltd. Therefore, the overall IPO of ASK Automotive Ltd will also comprise the sale of 2,95,71,390 shares (295.71 crore shares approximately), which at the upper price band of ₹282 per share will translate into total IPO issue size of ₹833.91 crore overall. There will only 2 promoter shareholders offering shares under the OFS portion. The shares will be listed on the NSE and the BSE. Being a total offer for sale (OFS), there will be no fresh funds coming into the company from the IPO. The IPO will be lead managed by JM Financial, Axis Capital, ICICI Securities, and IIFL Securities. Link Intime India Private Ltd will be the registrar to the issue.

About the GMP pricing for ASK Automotive Ltd Solutions

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 ASK Automotive 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 ASK Automotive IPO for which data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹40, but has since tapered to ₹28 for which GMP data is available. The GMP trading has only started about a couple of days back, so it may take some time for a more realistic price to be discovered in the unofficial market Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 07th November 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, ASK Automotive Ltd has shown good traction in the grey market.

If you consider the upper end of price band of the IPO of ASK Automotive Ltd at ₹282, then the likely listing price is being signalled at around ₹318 per share as per the GMP indicator on 06th November 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 ₹36 on the upper end of the book built IPO price of ₹282 indicates a listing premium of a moderate to healthy 12.77% for ASK Automotive Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹318 per share, when ASK Automotive Ltd lists on 20th November 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 instead of just the GMP absolute numbers.

How to apply for the ASK Automotive IPO

Lot size is the minimum number of shares that the investor has to put in as part of the IPO application. The lot size only applies for the IPO and once it is listed then it can be even traded in multiples of 1 shares since it is a mainboard issue. Investors in the IPO can only invest in minimum lot size of 53 shares and in multiples thereof. In the case of ASK Automotive Ltd, the minimum lot size is 53 shares with upper band indicative value of ₹14,946. The table below captures the minimum and maximum lots sizes applicable for different categories of investors in the IPO of ASK Automotive Ltd.

It may be noted here that for the B-HNI category and for the QIB (qualified institutional buyer) category, there are no upper limits applicable.

Quota allocation across IPO investor categories

The company was promoted by Kuldip Singh Rathee and Vijay Rathee. Currently the promoters hold 100.00% stake in the company. While the overall equity does not get diluted, the OFS will result in the promoter stake getting diluted from 100% to 85%. As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyers (QIBs), while 35% of the total issue size is reserved for the retail investors. The residual 15% is kept aside for the HNI / NII investors. The table below captures the gist of the allocation to various categories.

It may be noted here that the Net Offer above refers to the quantity net of employee quota, if any. The anchor portion, will be carved out of the QIB portion and the QIB portion under the IPO would be reduced proportionately. The anchor allocation will happen one working day ahead of the opening of the IPO; i.e., on 06th November 2023.

The issue opens for subscription on 07th November 2023 and closes for subscription on 09th November 2023 (both days inclusive). The basis of allotment will be finalized on 15th November 2023 and the refunds will be initiated on 16th November 2023. In addition, the demat credits are expected to happen on 17th November 2023 and the stock is scheduled to list on 20th November 2023 on the NSE and the BSE. It is a mainboard issue so it will be traded in the regular EQ listing on the NSE.