Gandhar Oil IPO GMP (Grey Market Premium)

Gandhar Oil Refinery India IPO opens on 22nd November 2023 and closes for subscription on 24thNovember 2023. The stock of Gandhar Oil Refinery India Ltd has a face value of ₹2 per share and the price band for the book building IPO is between ₹160 to ₹169 per share. The final price will be discovered within this band. The IPO of Gandhar Oil Refinery India Ltd will be a combination of a fresh issue and an offer for sale (OFS). The fresh issue portion of Gandhar Oil Refinery India Ltd IPO comprises the issue of 1,78,69,822 shares (178.70 lakh shares approximately), which at the upper price band of ₹169 per share will translate into fresh issue size of ₹302 crore. The offer for sale (OFS) portion of the IPO comprises the sale of 1,17,56,910 shares (117.57 lakh shares), which at the upper price band of ₹169 per share will translate into an offer for sale (OFS) size of ₹198.69 crore.

The OFS selling will be by the promoter shareholders and some of the early investor shareholder. Out of the offer for sale of 117.57 lakh shares in the OFS, the promoter shareholders will offer 67.50 lakh shares, with the balance shares by investor shareholders. Therefore, the overall Gandhar Oil Refinery India IPO will comprise the issue and sale of 2,96,26,732 shares (296.27 crore shares approximately), which at the upper price band of ₹169 per share will translate into total IPO issue size of ₹500.69 crore. The net proceeds from the IPO fresh issue portion will be utilized for investing in Texol by way of loan to refinance repayment to Bank of Baroda, capex for purchase of equipment, automotive oil capacity expansion, expansion of the oil and jelly facility at Taloja etc. The OFS portion is being offered by the promoters shareholders as well as some of the investor shareholders. The IPO will be lead managed by Nuvama Wealth Management and ICICI Securities Ltd. Link Intime India Private Ltd will be the registrar to the issue.

About the Gandhar Oil 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 Gandhar Oil Refinery India Ltd, we already have GMP data for the last 5 days, which should give a reasonable picture of the likely listing. We have not considered previous data, since the price has just been announced.

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 Gandhar Oil Refinery India IPO for which the data is available.

The IPO price of Gandhar Oil Refinery India Ltd was only announced on Thursday, so the actual GMP may still take some time to manifest the real underlying value. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 22nd November 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, Gandhar Oil Refinery India Ltd has shown moderately strong traction in the grey market.

If you consider the upper end of price band of the IPO of Gandhar Oil Refinery India Ltd at ₹169, then the likely listing price is being signalled at around ₹215 per share as per the GMP indicator on 17th November 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 ₹46 on the upper end of the book built IPO price of ₹169 indicates a listing premium of a healthy 27.22% for Gandhar Oil Refinery India Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹215 per share, when Gandhar Oil Refinery India Ltd lists on 05th December 2023. Of course, these are purely 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 instead of just the GMP absolute numbers.

How to apply for the Gandhar Oil IPO?

Lot size is the minimum number of shares that the investor has to put in as part of the IPO application. The lot size only applies for the IPO and once it is listed then it can be even traded in multiples of 1 shares since it is a mainboard issue. Investors in the IPO can only invest in minimum lot size and in multiples thereof. In the case of Gandhar Oil Refinery India Ltd, the minimum lot size is 88 shares with upper band indicative value of ₹14,872. The table below captures the minimum and maximum lots sizes applicable for different categories of investors in the IPO of Gandhar Oil Refinery India Ltd.

It may be noted here that for the B-HNI category and for the QIB (qualified institutional buyer) category, there are no upper limits applicable.

Also read about Gandhar Oil Refineries IPO

Quota allocation across IPO investor categories

Currently the promoters hold 87.50% stake in the company, which will get diluted post the IPO due to the impact of the fresh issue as well as to the tune of the FPI selling their shares in the company via the OFS. As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyers (QIBs), while 35% of the total issue size is reserved for the retail investors. The residual 15% is kept aside for the HNI / NII investors. The stock of Gandhar Oil Refinery India Ltd will be listed on the NSE and on the BSE. The table below captures the gist of the allocation to various categories.

It may be noted here that the Net Offer above refers to the quantity net of employee quota. Employees may get a discount to the IPO price, but that would be communicated separately in the application forms. The anchor portion, will be carved out of the QIB portion.

The issue opens for subscription on 22nd November 2023 and closes for subscription on 24th November 2023 (both days inclusive). The basis of allotment will be finalized on 30th November 2023 and the refunds will be initiated on 01st December 2023. In addition, the demat credits are expected to happen on 04th December 2023 and the stock is scheduled to list on 05th December 2023 on the NSE and the BSE. It is a mainboard issue so it will be traded in the regular EQ listing on the NSE.