Goyal Salt IPO GMP (Grey Market Premium)

Goyal Salt IPO worth ₹18.63 crore comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO from promoters and early shareholders. The price band has been fixed in the range of ₹36 to ₹38 per share and the final price will be discovered in this band via book building. The fresh issue portion of the IPO entails the issue of 49.02 lakh shares which at the upper end of the price band at ₹38 is worth ₹18.63 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹18.63 crore is also the size of the overall IPO.

How to apply for the Goyal Salt IPO

The stock of Goyal Salt IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 3,000 share each, entailing a minimum investment of ₹114,000 in the IPO at the upper end of the price band of ₹38 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 6,000 shares entailing an investment of ₹228,000. 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. It is captured in the table below.

Like in every SME IPO, the IPO of Goyal Salt Ltd also has a market maker. The Market maker typically provides buy and sell quotes post listing to ensure liquidity and low basis risk in the stock. In this case, the market makers will be Holani Consultants, who will act as the market maker for the SME IPO of Goyal Salt Ltd. The company has set aside 2,46,000 shares for the market maker.

The issue opens for subscription on 26th September 2023 and closes for subscription on 29th September 2023 (both days inclusive). The basis of allotment will be finalized on 05th October 2023 and the refunds will be initiated on 06th October 2023. In addition, the demat credits are expected to happen on 09th October 2023 and the stock is scheduled to also list on 10th October 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.

About the Goyal Salt 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 Goyal Salt Ltd, we already have GMP data for the last 3 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.

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 Goyal Salt IPO for which the data is available:

In the above case, the GMP trend shows that the grey market premium has opened at around ₹13, but its up by ₹42. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 26th September 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, Goyal Salt Ltd has shown good traction in the grey market.

If you consider the upper end of band price of the IPO of Goyal Salt Ltd at ₹38, then the likely listing price is being signalled at around ₹51 per share as per the GMP indicator on 20th September 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 ₹13 on the upper end of the book built IPO price of ₹38 indicates a listing premium of a healthy 34.21% for Goyal Salt Ltd over the listing price. That pre-supposes a listing price of approximately ₹51 per share, when Goyal Salt Ltd lists on 10th September 2023. Of course, these are 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 than on numbers.

Also read about Goyal Salt IPO

Brief on Goyal Salt Ltd

Goyal Salt Ltd was incorporated in 2010 for carrying out the business of refining raw salts. These salts are typically procured from sub-soil brine in Rajasthan for use as industrial salts and also as edible salts. Goyal Salt Ltd refines and supplies pure, refined, and quality range of triple-refined free-flow iodized salt. It also supplies industrial salts, double-fortified salt, and triple-refined half-dry salt. Goyal Salt Ltd sources raw materials from the open market accounting for about 75% of the total requirement of raw salt. In addition, salt land harvesting also brings them adequate supplies. Its industrial salts find application in product applications in soaps, detergents, textiles, glass, polyester, plastics, rubber, leather, and chemicals. It has a full-fledged refinery located in the Nawa City, spread across 1.45 Hectares of land. In addition, the government of Rajasthan has also assigned the company lease rights to harvest raw salt over 18.66 hectares of land.

The company has been promoted by Rajesh Goyal, Pramesh Goyal, Lokesh Goyal, Radhika Goyal, Priyanka Goyal, Rekha Goyal, Kunj Bihari Goyal HUF, Rajesh Goyal HUF, Parmesh Goyal HUF, and Lokesh Goyal HUF. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares, the promoter equity holding will get diluted to 72.61%. This is essential to list as promoter holding must be below 75%. The fresh issue funds will be used by the company for meeting capital expenditure for quality enhancement, brand creation and marketing expenses, funding working capital expenses and also to partially fund general corporate expenses. While Holani Consultants Private Ltd will be the lead manager to the issue, Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue is Holani Consultants.