Cell Point IPO GMP (Grey Market Premium)

Cell Point IPO worth ₹50.34 crore, comprises entirely of a fresh issue of shares by the company. The price for the fixed price IPO has been set at ₹100 per share. The fresh issue portion entails the issue of 50.34 lakh shares which at the fixed price of the IPO of ₹100 is worth ₹50.34 crore. There is no OFS component to the IPO and one must remember that while fresh issue is EPS dilutive, the OFS is just a transfer of ownership and not EPS dilutive. Therefore, the overall IPO is equal to the fresh issue of 50.34 lakh shares, which at the fixed IPO price of ₹100 per share works out to total issue size of ₹50.34 crore.

The stock of Cell Point IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 1,200 share each, entailing a minimum investment of ₹120,000 in the IPO at the fixed IPO price of ₹100 per share. That is also the maximum that a retail investor can bid in the IPO. HNIs, NIIs can bid for minimum of 2 lots of 2,400 shares entailing an investment of ₹240,000. The table below captures the lot sizes permissible.

As per the terms of the offer, 50% of the net offer is reserved for the retail investors and 50% of the offer is reserved for other investors. There is also an allocation for market making which will be carved out of the non-retail portion. It is a fixed price issue with the price already fixed at ₹100 per share. NNM Securities Ltd will act as market makers for the SME IPO of Cell Point (India) Ltd. The company has set aside 252,000 shares for the market maker, to provide buy-sell quotes to keep the counter liquid.

The issue opens for subscription on 15th June 2023 and closes for subscription on 20th June 2023 (both days inclusive). The basis of allotment will be finalized on 23rd June 2023 and the refunds will be initiated on 26th June 2023. In addition, the demat credits are expected to happen on 27th June 2023 and the stock is scheduled to list on 29th June 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 4-5 days prior to IPO opening and continues till the listing date. In the case of Cell Point (India) 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.

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 Cell Point (India) Ltd for the 2 days, data is available.