Homesfy Realty IPO GMP (Grey Market Premium)

Homesfy Realty IPO worth Rs. 15.86 crore comprises entirely of a fresh issue of the said amount. The total SME IPO of Homesfy Realty Ltd entails the issue of 8.052 lakh shares at a price of Rs. 197 per share aggregating to Rs. 15.86 crore. The stock has a face value of Rs. 10 and bidders can only bid in minimum lot size of 600 share each, entailing a minimum investment of Rs. 118,200 in the IPO. That is also the maximum that a retail investor can apply for in the IPO. HNI investors can apply for a minimum of 2 lots implying a minimum bid size of 1,200 shares and entailing an investment value of Rs. 236,400. As per the terms of the offer, 50% of the net offer is reserved for the retail investors and the balance 50% for the HNI (NII) investors. It is a fixed price issue and Rikhav Securities Ltd will act as the market maker for the Homesfy Realty SME IPO.

The issue opens for subscription on 21st December 2022 and closes for subscription on 23rd December 2022 (both days inclusive). The basis of allotment will be finalized on 28th December 2022 and the refunds will be initiated on 29th December 2022. In addition, the demat credits are expected to happen on 30th December 2022 and the stock is scheduled to list on 02nd January 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. 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 Homesfy Realty 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.

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 Homesfy Realty Ltd for the 3 days, data is available.

In the above case, the GMP trend shows that the grey market premium had opened strong and robust at Rs. 46, but after bouncing to Rs. 49, the GMP has now tapered to Rs. 34 per share on 21st December 2022. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription 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, Homesfy Realty Ltd has shown reasonable traction in the grey market.

If you consider the price of the IPO of Homesfy Realty Ltd at Rs. 197 then the likely listing price is being signalled at around Rs. 231 per share as per the GMP indicator on 21st December 2022. 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 from here.

The GMP of Rs. 34 on a fixed IPO price of Rs. 197 indicates a listing premium of 17.26% for Homesfy Realty Ltd on the listing price. That pre-supposes a listing price of approximately Rs. 231 per share, when Homesfy Realty Ltd lists on 02nd January 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. 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.

Homesfy Realty Limited is a 11 year old Proptech which provides real estate broking services to developers, retail buyers, sellers and investors. It has a network of 7 offices spread across Mumbai, Pune, Noida and Bengaluru. It has a hybrid operating model, combining online and offline presence. Homesfy employs 380 people on its rolls, with nearly 65% in sales roles.

The fresh funds will be used for meeting working capital needs. At the IPO pricing, the company will have a post listing market cap of Rs. 60.19 crore while the indicative price earnings ratio (P/E) for the stock is 10.87X. Post the IPO, the promoter share in equity will dilute from 71.69% to 52.80%. The issue is being lead managed by Sarthi Capital Advisors Private Limited. Bigshare Services Private Limited will be the registrars to the issue.