Concord Biotech IPO GMP (Grey Market Premium)

Concord Biotech IPO GMP
Concord Biotech IPO GMP

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Concord Biotech IPO worth ₹1,551 crore comprises entirely of an offer for sale and has no fresh issue component to it. The entire offer for sale is by Helix Investment Holdings Pte Ltd. Here it must be noted that while the fresh issue component infuses fresh funds into the company, it also is EPS dilutive and equity dilutive. On the other hand, the offer for sale (OFS), as in the case of Concord Biotech Ltd, is just a transfer of shares so there is no fresh infusion of funds, but it also does not dilute the equity. The issue has been priced in the band of ₹705 to ₹741 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process. For our analysis, the upper end of the price band is assumed to be the reference price.

About the Concord Biotech IPO

Let us now look at the details Concord Biotech IPO issue. The offer for sale of the company IPO will entail the issue of 2,09,25,652 shares (2.09 crore shares) which at the upper end of the price band of ₹741 would result in an offer for sale issue size of ₹1,551 crore. There is no fresh issue component in the IPO of Concord Biotech Ltd so the OFS of Rs1,551 crore is also the overall size of the IPO. The company has Sudhir Vaid and Manju Vaid as its main promoters, while RARE Enterprises (the Rakesh Jhunjhunwala investment company) holds 24% in Concord Biotech. However, Helix is the only selling shareholder and they will be reducing their stake in Concord Biotech to Nil post the OFS.

The issue opens for subscription on 04th August 2023 and closes for subscription on 08th August 2023 (both days inclusive). The basis of allotment will be finalized on 11th August 2023 and the refunds will be initiated on 14th August 2023. In addition, the demat credits are expected to happen on 17th August 2023 and the stock is scheduled to list on 18th August 2023 on the NSE and the BSE. There will be no fresh funds coming in through the IPO route but the sale of shares by Helix Investment Holdings Pte Ltd will help to increase the public float of the stock as it constitutes nearly 20% of the paid up capital of the company. This will be helpful in the post listing liquidity on the stock.

A brief on Concord Biotech 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 Concord Biotech Ltd, we already have GMP data for the last 3 days, which should give a reasonable picture of the likely listing performance. There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, which includes the levels of the Nifty and Sensex as well as the general IPO market and macro conditions. Secondly, the extent of subscription for the IPO across the retail and the QIB segments also has a deep impact on the GMP as it is indicative of investor interest in the stock. Generally, strong QIB subscription is a trigger for a spike in GMP.

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.

Concord Biotech IPO GMP (Grey Market Premium)

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 Concord Biotech IPO for which the data is available.

Date GMP
18-Aug-2023 ₹122
17-Aug-2023 ₹122
16-Aug-2023 ₹122
15-Aug-2023 ₹120
14-Aug-2023 ₹118
13-Aug-2023 ₹125
12-Aug-2023 ₹122
11-Aug-2023 ₹140
10-Aug-2023 ₹145
9-Aug-2023 ₹159
8-Aug-2023 ₹153
7-Aug-2023 ₹130
6-Aug-2023 ₹168
5-Aug-2023 ₹185
4-Aug-2023 ₹185
3-Aug-2023 ₹185
2-Aug-2023 ₹150
1-Aug-2023 ₹180
31-July-2023 ₹205
30-July-2023 ₹325
29-July-2023 ₹330

In the above case, the GMP trend shows that the grey market premium has opened at around ₹330, and drop its dropped by ₹122. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 04th August 2023, 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, Concord Biotech Ltd has shown good traction in the grey market. Also, it must be noted that the price band for Concord Biotech was only announced today, hence the trading in GMP till yesterday was based more on anticipated price of listing.

If you consider the upper end of the price band of Concord Biotech Ltd at ₹741 as the indicative price, then the likely listing price is being signalled at around ₹1,066 per share as of the GMP indicator on 31st July 2023. One data point to track will be the subscription update on the stock as that would chart the GMP course from here. As mentioned, the institutional QIB subscription is a key trigger for the GMP pricing.

The GMP of ₹325 on a likely upper band pricing of ₹741 indicates a listing premium of a healthy 43.86% for Concord Biotech Ltd over the listing price. That pre-supposes a listing price of approximately ₹1,066 per share, when Concord Biotech Ltd lists on 18th August 2023. Of course, these are approximations, so you must keep a margin of safety. However, that would depend on the GMP sustaining over the next few days after the issue opens.

GMP (grey market price) is an important indicator, albeit informal, of likely listing price. One cannot take this price at face value However, the GMP tends to be quite dynamic and changes direction with the flow of news and events. Investors must note here that this is just an informal indication and has no official acceptance. The best thing one can do with the GMP is to observe the trend closely as that gives the best hints on listing status. Focus on the time series trend than on numbers.

Brief business profile of Concord Biotech

Concord Biotech Ltd, a company backed by Rakesh Jhunjhunwala’s RARE Enterprises, is a R&D driven biopharma company. It is into the manufacture of Active Pharmaceutical Ingredients (API) via fermentation and semi-synthetic processes; apart from finished formulations. Concord Biotech has transformed from being a single-product company to a wide-spectrum solution provider. It offers products and solutions across various therapeutic segments. It has an established presence in 70 countries globally with distribution set-ups in the US, Europe, Japan, Latin America, Africa, and Asia. It also has a significant presence in the domestic market. 

Concord Biotech Ltd has 3 manufacturing facilities located in Gujarat. The Unit I at Dholka facility manufactures different classes of APIs. The Unit II at Valthera facility is into formulations manufacturing with focus on tablets, capsules, oral solutions, and oral suspensions. Concord is also developing liquid and lyophilized vials injectable line, a dry powder injectable line and a sterile powder bulk lyophilization line, which will be dedicated to manufacturing of injectables. The Unit III, Limbasi facility is also an API manufacturing facility. It has a total of 24 fermenters with aggregate fermentation capacity of 800 m3. The IPO will be lead managed by Kotak Mahindra Capital Company, Citigroup Global Markets and Jefferies India Private ltd. The registrar to the issue is Link Intime India Private Ltd.

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.


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