Cellecor Gadgets IPO GMP (Grey Market Premium)

Cellecor Gadgets IPO worth ₹50.77 crore comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO from promoters and early shareholders. The price band has been fixed in the range of ₹87 to ₹92 per share and the final price will be discovered in this band via book building. The fresh issue portion of the IPO entails the issue of 55.19 lakh shares which at the upper end of the price band at ₹92 is worth ₹50.77 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹50.77 crore is also the size of the overall IPO.

How to apply for the Cellecor Gadgets IPO

The stock of Cellecor Gadgets 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 ₹110,400 in the IPO at the upper end of the price band of ₹92 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 ₹220,800. The table below captures the lot sizes permissible.

As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyers (QIBs), 15% of the offer is reserved for the HNI / NII investors and the balance 35% is reserved for the retail investors. It is a Book Built issue with the price band and the final price will be discovered through book building process. It is captured in the table below.

Like in every SME IPO, Cellecor Gadgets IPO 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, the makers will be SS Corporate Services Ltd and Kantilal Chhaganlal Securities Ltd, who will act as the market maker for the SME IPO of Cellecor Gadgets Ltd. The company has set aside 276,000 shares for the market maker inventory.

The issue opens for subscription on 15th September 2023 and closes for subscription on 20th September 2023 (both days inclusive). The basis of allotment will be finalized on 25th September 2023 and the refunds will be initiated on 26th September 2023. In addition, the demat credits are expected to happen on 27th September 2023 and the stock is scheduled to also list on 28th September 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.

About Cellecor Gadgets IPO GMP

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 Cellecor Gadgets 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 Cellecor Gadgets IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹10, and has moved up by ₹50 per share. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 15th September 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, Cellecor Gadgets Ltd has shown good traction in the grey market.

If you consider the upper end of band price of the IPO of Cellecor Gadgets Ltd at ₹92, then the likely listing price is being signalled at around ₹102 per share as per the GMP indicator on 09th September 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 ₹10 on the upper end of the book built IPO price of ₹92 indicates a listing premium of a moderate to healthy 10.87% for Cellecor Gadgets Ltd over the listing price. That pre-supposes a listing price of approximately ₹102 per share, when Cellecor Gadgets Ltd lists on 28th September 2023. Of course, these are 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 on numbers.

Read about Cellecor Gadgets IPO

Brief on the business model of Cellecor Gadgets Ltd

Cellecor Gadgets Ltd was incorporated in 2020 and is engaged in the procurement, branding and distribution of an array of electronic gadgets and equipment. The product basket includes television sets, mobile phones, smart phones, smart wearables, mobile accessories, smart watches, and neckbands. It runs a massive distribution and servicing networks for electronic equipment and smart products in India. Just to give an idea, the company has a network of more than 1,200 service centres and that is complemented by more than 800 distributors across the length and breadth of India. It largely markets through multi-product stores and currently its products are available through a network of over 24,000 stores across India. It offers 300 products of different variations and mutations and has more than 100 million users across India. Sales have more than doubled in FY23 over FY22.

Cellecor Gadgets Ltd operates across 3 business verticals. The first is entertainment and communication products. These include smart and conventional television sets. These are available in standard and LED versions equipped with the latest Android ecosystem. It has more than 35 SKUs of televisions, 15 SKUs of sound systems and more than 70 SKUs of mobile phones. The second vertical is peripherals. These include TWS earbuds, neckbands, and smart watches. Here, the company has more than 145 SKUs. Finally, the third vertical is modern accessories. This includes power banks, data cables, USB chargers, adapters, chargers etc. There are more than 40 SKUs under this category. Cellecor Gadgets Ltd markets its products through an omnichannel approach; via online and brick-and-mortar.

Cellecor Gadgets Ltd was promoted by Ravi Agarwal and Nikhil Agarwal. They currently hold 69.95% stake which will dilute to 51.54% post the IPO. The fresh issue funds will be used for meeting its working capital funding gaps and for general corporate expenses. Narnolia Financial Services Ltd will be the lead manager to the issue, while Skyline Financial Services Private Ltd is the registrar to the issue. The market making for the issue will be jointly done by SS Corporate Services Ltd and Kantilal Chhaganlal Securities Ltd.