Drone Destination IPO GMP (Grey Market Premium)

Drone Destination IPO worth ₹44.20 crore comprises entirely of a fresh issue of shares and there is no component of offer for sale (OFS) by promoters and early shareholders. The price band has been fixed in the range of ₹62 to ₹65. The fresh issue portion entails the issue of 68.00 lakh shares which at the upper end of the price band at ₹65 is worth ₹44.20 crore. Since there is no OFS component in the IPO, the fresh issue portion is also the total size of the IPO of Drone Destination Ltd.

The stock of Drone Destination 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. Nikunj Stock Brokers and Share India Securities Ltd will act as the market maker for the SME IPO of Drone Destination Ltd. The company has set aside 500,000 shares for the market maker. The overall allocation of shares will be as under.

The issue opens for subscription on 07th July 2023 and closes for subscription on 11th July 2023 (both days inclusive). The basis of allotment will be finalized on 14th July 2023 and the refunds will be initiated on 17th July 2023. In addition, the demat credits are expected to happen on 18th July 2023 and the stock is scheduled to list on 19th July 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. 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 Drone Destination 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.

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 Drone Destination IPO for which the data is available.