Digikore Studios IPO GMP (Grey Market Premium)

Digikore Studios IPO GMP
Digikore Studios IPO GMP

by Tanushree Jaiswal Last Updated: Oct 04, 2023 - 11:16 am 2.6k Views
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The ₹30.48 crore IPO of Digikore Studios Ltd comprises of a fresh issue and an offer for sale (OFS) component in the IPO from promoters and early shareholders. The price band has been fixed in the range of ₹168 to ₹171 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 12.608 lakh shares which at the upper end of the price band at ₹171 is worth ₹21.56 crore. The offer for sale (OFS) portion of the IPO entails the sale of 5.216 lakh shares which at the upper end of the price band at ₹171 is worth ₹8.92 crore.  Therefore, the total IPO issue size entails the issue of 17.824 lakh shares which at the upper end of the price band at ₹171 is worth ₹30.48 crore

How to apply for the Digikore Studios Ltd IPO

The stock of Digikore Studios IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 800 share each, entailing a minimum investment of ₹136,800 in the IPO at the upper end of the price band of ₹171 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 1,600 shares entailing an investment of ₹273,600. The table below captures the lot sizes permissible.

Application Lots Shares Amount
Retail (Min) 1 800 ₹136,800
Retail (Max) 1 800 ₹136,800
HNI (Min) 2 1,600 ₹273,600

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.

QIB Shares Offered Not more than 50.00% of the Net offer
NII (HNI) Shares Offered Not less than 15.00% of the Offer
Retail Shares Offered Not less than 35.00% of the Offer

Like in every SME IPO, the IPO of Digikore Studios Ltd 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 market makers will be Gretex Share Broking Ltd, who will act as the market maker for the SME IPO of Digikore Studios Ltd. The company has set aside 1,78,400 shares for the market maker.

The issue opens for subscription on 25th September 2023 and closes for subscription on 27th September 2023 (both days inclusive). The basis of allotment will be finalized on 29th September 2023 and the refunds will be initiated on 03rd October 2023. In addition, the demat credits are expected to also happen on 03rd October 2023 and the stock is scheduled to also list on 04th October 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 GMP pricing for Digikore Studios Ltd

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 Digikore Studios Ltd, we already have GMP data for the last 3 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 Digikore Studios IPO for which the data is available.

Date Grey Market Price (GMP)
4-Oct-2023 ₹65
3-Oct-2023 ₹65
2-Oct-2023 80
1-Oct-2023 ₹80
30-Sep-2023 ₹80
29-Sep-2023 ₹80
28-Sep-2023 ₹90
27-Sep-2023 ₹115
26-Sep-2023 ₹120
25-Sep-2023 ₹120
24-Sep-2023 ₹155
23-Sep-2023 ₹125
22-Sep-2023 ₹105
21-Sep-2023 ₹105
20-Sep-2023 ₹100
19-Sep-2023 ₹100
18-Sep-2023 ₹100

In the above case, the GMP trend shows that the grey market premium has opened at around ₹100, and its dropped by ₹65. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 25th 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, Digikore Studios Ltd has shown good traction in the grey market.

If you consider the upper end of band price of the IPO of Digikore Studios Ltd at ₹171, then the likely listing price is being signalled at around ₹271 per share as per the GMP indicator on 20th 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 ₹100 on the upper end of the book built IPO price of ₹171 indicates a listing premium of a healthy 58.48% for Digikore Studios Ltd over the listing price. That pre-supposes a listing price of approximately ₹271 per share, when Digikore Studios Ltd lists on 04th October 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.

Brief on Digikore Studios Ltd

Digikore Studios Ltd was incorporated in 2000 and is one of the leading visual effects studios in India offering the complete suite of visual effects services to its clients. In terms of its value proposition, Digikore Studios Ltd offers Visual Effects (VFX) services for films, web series & OTT, TV serials & programs, documentaries, and commercials. Some of the notable works delivered by Digikore Studios Ltd include popular properties like Thor: Love and Thunder, Black Panther: Wakanda Forever, Deadpool, Star Trek, Jumanji, Stranger Things, The Last Ship, Titanic, Ghost Rider: Spirit of Vengeance, Transformers: Age of Extinction, Crouching Tiger, and many more. Its VFX clients are spread across India, Australia, New Zealand, the US, and Euro Zone. It is a niche business where the specialized skills that India brings to the table, combined with lower costs, proves to be a winning proposition.

The company has been promoted by Abhishek Rameshkumar More and M/S Shree MPJ Cement works LLP. The promoter holding in the company currently stands at 93.38%. However, post the fresh issue of shares and the OFS, the promoter equity holding share will get diluted to 66.55%. The fresh issue funds will be used by the company for meeting its working capital needs and for general corporate expenses. While Sarthi Capital Advisors Private Ltd will be the lead manager to the issue, Bigshare Services Private Ltd will be the registrar to the issue.

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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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