E Factor Experiences IPO GMP (Grey Market Premium)

E Factor Experiences IPO is a fresh issue of shares with no offer for sale. It is a book built issue with the share having a face value of ₹10 per share and the IPO price band set in the range of ₹71 to ₹75 per share. As part of the fresh issue portion of the IPO, E Factor Experiences Ltd will issue a total of 34,56,000 shares (34.56 lakh shares). At the upper band of the IPO price of ₹75 per share, the total value of the fresh issue portion aggregates to ₹25.92 crore. Since there is no offer for sale portion, the fresh issue will also be the total size of the issue. Thus, the total issue size of E Factor Experiences Ltd will also entail the issue and sale of 34,56,000 shares (34.56 lakh shares). At the upper band of the IPO price of ₹75 per share, the total size of the IPO of E Factor Experiences Ltd will be ₹25.92 crore.

How to apply for the E Factor Experiences IPO

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹120,000 (1,600 x ₹75 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 3,200 shares and having a minimum lot value of ₹240,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

Out of the total shares on offer, the company has allocated 1,74,400 shares for the market maker for providing liquidity post listing and reducing basis risk. The net offer (net of market maker allocation) will be distributed between the QIBs, retail investors and the HNI / NII investors. The table below captures the gist of the IPO allocation to various categories.

Like in every SME IPO, the IPO of E Factor Experiences 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 makers will be Hem Finlease Ltd, who will act as the market maker for the SME IPO of E Factor Experiences Ltd. The company has set aside 1,74,400 shares for the market maker.

The table below captures the key dates pertaining to the E Factor Experiences IPO.

The listing will happen in the NSE-SME segment, which is in contrast to the mainboard, and the IPOs of small and medium enterprises (SMEs) are incubated in NSE-SME segment.

About E Factor Experiences 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 E Factor Experiences 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 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 E Factor Experiences 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 now its up by ₹32 for which GMP data is available. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 27th 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, E Factor Experiences Ltd has shown good traction in the grey market.

If you consider the fixed IPO price of E Factor Experiences Ltd at ₹75, then the likely listing price is being signalled at around ₹95 per share as per the GMP indicator on 26th 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 fixed IPO price of ₹75 indicates a listing premium of a healthy 26.67% for E Factor Experiences Ltd over the listing price. That pre-supposes a listing price of approximately ₹95 per share, when E Factor Experiences Ltd lists on 11th 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 E Factor Experiences Ltd

E Factor Experiences Ltd was incorporated in 2006, as an Indian event management company. E Factor Experiences Ltd provides event experiences, event services, technology-based permanent & semi-permanent multimedia light & sound installations and specialized turnkey event assignments; apart from wedding management and social event solutions. The company has its offices in Delhi, Noida, Jaipur, and Odisha with its team of 32 employees. Some of the major events managed by E Factor Experiences Ltd include Eco Retreat (Odisha), Dot Fest in Bhubaneswar, Laser Show and Fireworks at Deepotsav, Kashi and the Baba Saheb - The Grand Musical Show. The company recently acquired 46.33% stake in Untamed Leisure and Hospitality Pvt Ltd, which is engaged in the business of event management and hospitality; apart from other leisure and entertainment activities.

The company has been promoted by Jai Thakore, Samir Garg, and Manika Garg. The promoter holding in the company currently stands at 99.99%. However, post the fresh issue of shares, the promoter equity holding share will get diluted to 73.59%. The fresh issue funds will be used by the company for investing in its subsidiaries, repayment of certain borrowings and for working capital needs. Part of the funds would also be allocated towards general corporate expenses. While Hem Securities Ltd will be the lead manager to the issue, Maashitla Securities Private Ltd will be the registrar to the issue. The market maker for the issue will be Hem Finlease Ltd.