Crop Life Science IPO GMP (Grey Market Premium)

Crop Life Science IPO worth ₹26.73 crore comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO from promoters and early shareholders. The issue of Crop Life Science Ltd is a fixed price IPO with the IPO price has been already fixed at ₹52 per share. The fresh issue portion of the IPO entails the issue of 51.40 lakh shares which at the fixed IPO price of ₹52 is worth ₹26.73 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹26.73 crore is also the size of the overall IPO.

How to apply for the Crop Life Science IPO

The stock of Crop Life Science 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 ₹104,000 in the IPO at the fixed IPO price of ₹52 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 ₹208,000. 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 the balance 50% of the offer is reserved for the HNI / NII investors and other non-retail category investors. It is a fixed price issue with the IPO price already fixed at ₹52 per share. The allocation plan is captured in the table below.

Like in every SME IPO, Crop Life Science 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 Nikunj Stock Brokers Ltd, who will act as the market maker for the SME IPO of Crop Life Science Ltd. The company has set aside 260,000 shares for the market maker.

The issue opens for subscription on 18th August 2023 and closes for subscription on 22nd August 2023 (both days inclusive). The basis of allotment will be finalized on 25th August 2023 and the refunds will be initiated on 28th August 2023. In addition, the demat credits are expected to happen on 29th August 2023 and the stock is scheduled to also list on 30th August 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 Crop Life Science 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 Crop Life Science Ltd, we already have GMP data for the last 6 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 Crop Life Science IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹7, but has since fallen sharply to the level of ₹-7. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 18th August 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, Crop Life Science Ltd has shown good traction in the grey market.

If you consider the IPO fixed price of the IPO of Crop Life Science Ltd at ₹52 per share, then the likely listing price is being signalled at around ₹55 per share as per the GMP indicator on 16th August 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 ₹3 on the fixed IPO price of ₹52 indicates a listing premium of a moderate 5.77% for Crop Life Science Ltd over the listing price. That pre-supposes a listing price of approximately ₹55 per share, when Crop Life Science Ltd lists on 30th August 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 Crop Life Science IPO

Brief on Crop Life Science Ltd

Crop  Life Science Ltd, is an SME IPO on the NSE which is opening for subscription on 18th August 2023. The company, incorporated in 2006, is engaged in manufacturing, distributing, and marketing agrochemical formulations. Crop Life Science Ltd manufactures agricultural chemicals like micro fertilizers and pesticides which includes Insecticides, fungicides, herbicides, and weedicides. It has a manufacturing plant at the GIDC (Gujarat Industrial Development Corporation) Ankleshwar in the state of Gujarat. Crop Life Science Ltd exports its manufactured products to countries like Indonesia, Bangladesh, Egypt, Myanmar, Vietnam, and Sudan. Its product portfolio comprises more than 85 agrochemical products.

Apart from its main business, Crop Life Sciences also has two group companies. CLSL Pack Science Private Ltd into the manufacturing of induction sealing wads and other flexible packaging products. It has just about started generating revenues in FY22 and it is still making losses on a net basis. The other group company of Crop Life Sciences Ltd is Hetban Spechen Ltd. It has a modern and multipurpose plant to manufacture various technical grades of insecticides, fungicides, herbicides, and PGR and is located at Dahej in Gujarat. This group company still does not have any revenues of its own as its factory has been leased to Crop Life Sciences Ltd.

The fresh issue portion will be used to fund working capital expenses and for general corporate expenses. The issue will be lead managed by Interactive Financial Services Ltd while Purva Share Registry India Private Ltd will be the registrars to the SME IPO of Crop Life Science Ltd.