Global Surfaces IPO GMP (Grey Market Premium)

Global Surfaces IPO, worth Rs. 154.98 crore comprises of a fresh issue plus an offer for sale (OFS) by the promoters and early investors. The fresh issue component comprises the issue of 85.20 lakh shares worth Rs. 119.28 crore. In addition, the OFS portion will comprise of the issue of 25.50 lakh shares worth Rs. 35.70 crore. The overall issue will comprise of the issue of 110.70 lakhs shares worth Rs. 154.98 crore.

Here it must be noted that the fresh issue component infuses fresh funds into the company, but is also EPS dilutive and equity dilutive. On the other hand, the OFS is just a transfer of shares so there is no fresh infusion of funds, but it also does not dilute the equity. The IPO has been priced in the band of Rs. 133 to Rs. 140 per share and the IPO allotment price will be discovered post the book building of shares. However, for all the above issue size calculations, we have assumed the upper price band of Rs. 140 per share as indicative.

The issue opens for subscription on 13th March 2023 and closes for subscription on 15th March 2023 (both days inclusive). The basis of allotment will be finalized on 20th March 2023 and the refunds will be initiated on 21st March 2023. In addition, the demat credits are expected to happen on 22nd March 2023 and the stock is scheduled to list on 23rd March 2023 on the NSE and the BSE. 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 Surfaces Ltd, we already have GMP data for the last 2 days, which should give a reasonable picture of the likely listing performance, to begin with.

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 Surfaces IPO the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 37, but has since dropped to Rs. 18. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 13th March 2023, 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 Surfaces Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of Global Surfaces Ltd at Rs. 140 as the indicative price, then the likely listing price is being signalled at around Rs. 180 per share as of the GMP indicator on 09th March 2023. 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. 40 on a likely upper band pricing of Rs140 indicates a listing premium of a healthy 28.57% for Global Surfaces Ltd over the listing price. That pre-supposes a listing price of approximately Rs. 180 per share, when Global Surfaces Ltd lists on 23rd March 2023. 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 Surfaces Limited processes natural stones and manufactures engineered quartz out of that. The company works on processing various natural stones formed through complex geological processes including granite, limestone, marble, quartzite, travertine etc. For this purpose, Global Surfaces Ltd has 2 industrial units. While one is located at RIICO Industrial Area, Jaipur; the other unit is located at the Mahindra World City SEZ, Jaipur. Some of its major products find applications in flooring, wall cladding, countertops, cut-to-size, and other items. It caters extensively to the domestic commercial and residential units in India, but these processed stones are also exported out of India in a big way.

In India, some of its popular users include Delhi Metro and the Manipal University in Jaipur. Some of its marquee global clients include the Hilton Garden Hotel, Durham, Hilton Garden, Hoffman (US), Dubai International Airport, Burj Khalifa Tower Dubai, Zabeel Palace etc. The IPO has a 50% allocation to QIBs, 35% to retail and 15% to HNI/NIIs. The issue will be lead managed by Unistone Capital Private Ltd while Bigshare Services Private Ltd will be the registrars to the issue.