Essen Speciality Films IPO GMP (Grey Market Premium)

Essen Speciality Films IPO worth ₹66.33 crore, comprises of a fresh issue and an offer for sale (OFS) by promoters and early shareholders. The price band has been fixed in the range of ₹101 to ₹107. The fresh issue portion entails the issue of 46.992 lakh shares which at the upper end of the price band at ₹107 is worth ₹50.28 crore. The OFS portion entails the issue of 15 lakh shares which at the upper end of the price band at ₹107 is worth ₹16.05 crore. Overall, the IPO entails the issue of 61.992 lakh shares, which at the upper price band of ₹107 per share works out to total issue size of ₹66.33 crore.

The stock of Essen Speciality Films IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 1,200 share each, entailing a minimum investment of ₹128,400 in the IPO at the upper end of the price band of ₹107 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 2,400 shares entailing an investment of ₹256,800. 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. SMC Global Securities Ltd will act as the market maker for the SME IPO of Essen Speciality Films Ltd. The company has set aside 310,800 shares for the market maker. Here is the allocation design.

The issue opens for subscription on 23rd June 2023 and closes for subscription on 27th June 2023 (both days inclusive). The basis of allotment will be finalized on 03rd July 2023 and the refunds will be initiated on 04th July 2023. In addition, the demat credits are expected to happen on 05th July 2023 and the stock is scheduled to list on 06th 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 Essen Speciality Films 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 Essen Speciality Films IPO for which the data is available.