Global Health IPO GMP (Grey Market Premium)

Global Health IPO worth Rs.2,205.57 crore, comprises of a fresh issue of shares worth Rs500 core and an offer for sale of Rs1,707.57 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.319 to Rs.336 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process. 

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The issue opens for subscription on 03rd November 2022 and closes for subscription on 07th November 2022 (both days inclusive). The basis of allotment will be finalized on 11th November 2022 and the refunds will be initiated on 14th November 2022. In addition, the demat credits are expected to happen on 15th November 2022 and the stock is scheduled to list on 16th 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 Global Health Ltd, we already have GMP data for the last 4 days, which should give a reasonable picture of the likely listing performance.

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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.

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 Global Health Ltd, data is available.

In the above case, the GMP trend shows that the grey market premium has opened on 28th October at around Rs12 and has since surged above the Rs20 mark. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 03rd 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, Global Health Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of Global Health Ltd at Rs.336 as the indicative price, then the likely listing price is being signalled at around Rs.356 per share. 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.20 on a likely upper band pricing of Rs.336 indicates a listing premium of a healthy 5.95% for Global Health Ltd over the listing price. That pre-supposes a listing price of approximately Rs.356 per share, when Global Health Ltd lists on 16th 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.

Global Health is the franchise that operates the Medanta chain of hospitals founded by one of India’s foremost heart surgeons, Dr. Naresh Trehan.