Chavda Infra IPO GMP (Grey Market Premium)

Chavda Infra IPO worth₹43.26 crore comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO from promoters and early shareholders. It is a book building IPO and the price band has been fixed in the range of ₹60 to ₹65 per share. The final price will be discovered in this band via book building process. The fresh issue portion of the IPO entails the issue of 66.56 lakh shares which at the upper end of the price band at ₹65 is worth ₹43.26 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹43.26 crore is also the size of the overall IPO of the company.

How to apply for the Chavda Infra Ltd IPO

The stock of Chavda Infra IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 2,000 share each, entailing a minimum investment of ₹130,000 in the IPO at the upper end of the price band of ₹65 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 4,000 shares entailing an investment of ₹260,000. The table below captures the lot sizes permissible.

As per the terms of the offer, 50% of the net offer is reserved for the 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, Chavda Infra 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 Spread X Securities Ltd, who will act as the market maker for the SME IPO of Chavda Infra Ltd. The company has set aside 3,36,000 shares for the market maker.

The issue opens for subscription on 12th September 2023 and closes for subscription on 14th September 2023 (both days inclusive). The basis of allotment will be finalized on 20th September 2023 and the refunds will be initiated on 21st September 2023. In addition, the demat credits are expected to happen on 22nd September 2023 and the stock is scheduled to also list on 25th 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 the Chavda Infra 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 Chavda Infra 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 Chavda Infra IPO 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 Chavda Infra IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹20, but has moved up by ₹60. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 12th 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, Chavda Infra Ltd has shown good traction in the grey market.

If you consider the upper end of band price of the IPO of Chavda Infra Ltd at ₹65, then the likely listing price is being signalled at around ₹85 per share as per the GMP indicator on 06th 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 ₹20 on the upper end of the book built IPO price of ₹65 indicates a listing premium of a healthy 30.77% for Chavda Infra Ltd over the listing price. That pre-supposes a listing price of approximately ₹85 per share, when Chavda Infra Ltd lists on 25th 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 Chavda Infra IPO

Brief on Chavda Infra Ltd

Chavda Infra Ltd was incorporated in 2012 to provide construction and allied services. It provides these services across residential, commercial, and institutional projects in the state of Gujarat. The group is broadly active in the urban centres of Ahmedabad, Gandhinagar, and Rajkot. The group operates under 3 verticals viz. Chavda Infra, Chavda RMC and Chavda Developers. It has already developed and delivered more than 100 projects in Gujarat spread across residential, commercial, and institutional properties. It offers the end to end solution for realty development with services ranging from planning, design, construction, and post-construction activities. Chavda Infra is divided into 3 business lines, which include contracting services, development services and commercial renting services.

Some of the highly acclaimed projects completed by Chavda Infra in Ahmedabad include Straft Luxuria, Shivalik Parkview, Shivalik Sharda Harmony among key residential projects. Among commercial properties developed, they include AAA Corporate House, Sadbhav House, Solitaire Sky, Sandesh Press, Suyash Solitaire and Solitaire Connect. Some of its premium projects include the Nirma University (old building), Zydus School and AIS Toddlers Den. It currently has about 26 ongoing projects at various stages of completion with a combined marketable value of more than ₹600 crore. These 26 projects include 4 commercial property projects, 4 institutional infrastructure projects and the majority 18 residential projects. The total employee strength of Chavda Infra Ltd stands at over 250.

Chavda Infra Ltd has been promoted by Mahesh Chavda, Dharmishta Chavda and Johil Chavda. The promoter holding (including the promoter group) in the company currently stands at 100%. However, post the fresh issue of shares and the IPO, the promoter equity holding share will get diluted to 73%. The fresh issue funds will be used by the company for filling its working capital funding gaps and also for general corporate purposes. Part of the funds raised will also go towards meeting the IPO expenses. While Beeline Capital Advisors Private Ltd will be the lead manager to the issue, KFIN Technologies Ltd will be the registrar to the issue. The market maker for the IPO of Chavda Infra Ltd is Spread X Securities Ltd.