HMA Agro Industries IPO GMP (Grey Market Premium)

HMA Agro Industries IPO worth ₹480 crore, comprises of an offer for sale and also of a fresh issue of shares. The offer for sale (OFS) component is by the promoters and early shareholders of the company. Here it must be noted that while the fresh issue component infuses fresh funds into the company, it also is 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. Out of the total issue size of ₹480 crore, the Fresh issue is worth ₹150 crore while the offer for sale is worth ₹330 crore. The issue has been priced in the band of ₹555 to ₹585 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process. For our analysis, the upper end of the band is assumed.

Let us now look at the details of the issue of HMA Agro Industries IPO. The offer for sale of the company IPO will entail the issue of 56,41,026 shares which at the upper end of the price band of ₹585 would result in an offer for sale component of ₹330 crore. The fresh issue component of the company IPO will entail the issue of 25,64,103 shares which at the upper end of the price band of ₹585 would result in an offer for sale component of ₹150 crore. Therefore, the overall size of the company IPO will entail the issue of 82,05,129 shares which at the upper end of the price band of ₹585 would result in the total issue size of ₹480 crore.

The issue opens for subscription on 20th June 2023 and closes for subscription on 23rd June 2023 (both days inclusive). The basis of allotment will be finalized on 29th June 2023 and the refunds will be initiated on 30th June 2023. In addition, the demat credits are expected to happen on 03rd July 2023 and the stock is scheduled to list on 04th July 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 HMA Agro Industries Ltd, we already have GMP data for the last 2 days, which should give a reasonable picture of the likely listing performance.

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 HMA Agro Industries IPO for which the data is available.