Fusion Micro Finance IPO GMP (Grey Market Premium)

Fusion Microfinance IPO
Fusion Microfinance IPO GMP

IPOs
by 5paisa Research Team Last Updated: 2022-11-15T10:44:40+05:30

Fusion Micro Finance Ltd IPO worth Rs.1,104 crore, comprises of a fresh issue of shares worth Rs600 core and an offer for sale of Rs504 crore. The offer for sale (OFS) component is by the promoters or early shareholders of the company. The issue has been priced in the band of Rs.350 to Rs.368 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process.

Fusion Micro Finance IPO Review: 

 

The issue opens for subscription on 02nd November 2022 and closes for subscription on 04th November 2022 (both days inclusive). The basis of allotment will be finalized on 10th November 2022 and the refunds will be initiated on 11th November 2022. In addition, the demat credits are expected to happen on 14th November 2022 and the stock is scheduled to list on 15th November 2022. 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 Fusion Micro Finance Ltd, we already have GMP data for the last 4 days, which should give a reasonable picture of the likely listing performance.

Also Read: 10 data points that will drive stock markets this week


There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, which includes the levels of the Nifty and Sensex as well as the general IPO market and macro conditions. Secondly, the extent of subscription for the IPO across the retail and the QIB segments also has a deep impact on the GMP as it is indicative of investor interest in the stock. Generally, strong QIB subscription is a trigger for a spike in GMP.

 

Also read : Fusion Micro Finance IPO : 7 things to know about


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 Fusion Micro Finance Ltd.

 

Date

GMP

15-Nov-2022

Rs. -2

14-Nov-2022

Rs. -2

13-Nov-2022

Rs. 7

12-Nov-2022

Rs. 7

11-Nov-2022

Rs. 7

10-Nov-2022

Rs. 8

9-Nov-2022

Rs. 4

8-Nov-2022

Rs. 3

7-Nov-2022

Rs. 3

6-Nov-2022

Rs. -3

5-Nov-2022

Rs. -3

4-Nov-2022

Rs. -3

3-Nov-2022

Rs. 5

2-Nov-2022

Rs. 39

1-Nov-2022

Rs. 35

31-Oct-2022

Rs. 37

30-Oct-2022

Rs. 36

29-Oct-2022

Rs. 35

28-Oct-2022

Rs. 35

 

 

In the above case, the GMP trend shows that the grey market premium has opened on 28th October at around Rs35 and has since held around the Rs32 mark. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 02nd November, 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, Fusion Micro Finance Ltd has shown good traction in the grey market.


If you consider the upper end of the price band of Fusion Micro Finance Ltd at Rs.368 as the indicative price, then the likely listing price is being signalled at around Rs.400 per share (368 + 32). One data point to track will be the subscription update on the stock as that would chart the GMP course from here. As mentioned, the institutional QIB subscription is a key trigger for the GMP pricing.


The GMP of Rs.32 on a likely upper band pricing of Rs.368 indicates a listing premium of a healthy 8.70% for Fusion Micro Finance Ltd over the listing price. That pre-supposes a listing price of approximately Rs.400 per share, when Fusion Micro Finance Ltd lists on 15th November 2022. Of course, these are approximations, so you must keep a margin of safety. However, that would depend on the GMP sustaining over the next few days after the issue opens.


GMP (grey market price) is an important indicator, albeit informal, of likely listing price. One cannot take this price at face value However, the GMP tends to be quite dynamic and changes direction with the flow of news and events. Investors must note here that this is just an informal indication and has no official acceptance. The best thing one can do with the GMP is to observe the trend closely as that gives the best hints on listing status. Focus on the time series trend than on numbers.


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Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.

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