IKIO Lighting IPO GMP (Grey Market Premium)


by Tanushree Jaiswal Last Updated: Jun 16, 2023 - 10:42 am 15k Views

IKIO Lighting IPO worth ₹607 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. IKIO Lighting IPO has been priced in the band of ₹270 to ₹285 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 IKIO Lighting IPO. The offer for sale of the company IPO will entail the issue of 90,00,000 shares which at the upper end of the price band of ₹285 would result in an offer for sale component of ₹257 crore. The fresh issue component of the company IPO will entail the issue of 1,22,80,702 shares which at the upper end of the price band of ₹285 would result in an offer for sale component of ₹350 crore. Therefore, the overall size of the company IPO will entail the issue of 2,12,80,702 shares which at the upper end of the price band of ₹285 would result in the total issue size of ₹607 crore.

The issue opens for subscription on 06th June 2023 and closes for subscription on 08th June 2023 (both days inclusive). The basis of allotment will be finalized on 13th June 2023 and the refunds will be initiated on 14th June 2023. In addition, the demat credits are expected to happen on 15th June 2023 and the stock is scheduled to list on 16th June 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 IKIO Lighting Ltd, we already have GMP data for the last 4 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 IKIO Lighting IPO for which the data is available.

Date GMP
16-June-2023 ₹90
15-June-2023 ₹98
14-June-2023 ₹112
13-June-2023 ₹94
12-June-2023 ₹101
11-June-2023 ₹96
10-June-2023 ₹96
9-June-2023 ₹120
8-June-2023 ₹122
7-June-2023 ₹128
6-June-2023 ₹122
5-June-2023 ₹95
4-June-2023 ₹73
3-June-2023 ₹73
2-June-2023 ₹50

In the above case, the GMP trend shows that the grey market premium has opened at around ₹50, now has jumped to ₹90. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 06th June 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, IKIO Lighting Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of IKIO Lighting Ltd at ₹285 as the indicative price, then the likely listing price is being signalled at around ₹380 per share as of the GMP indicator on 05th June 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 ₹95 on a likely upper band pricing of ₹285 indicates a listing premium of a healthy 33.33% for IKIO Lighting Ltd over the listing price. That pre-supposes a listing price of approximately ₹380 per share, when IKIO Lighting Ltd lists on 16th June 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.

IKIO Lighting Ltd is a 7 year old company incorporated in the year 2016 and manufactures light-emitting diode (LED) lighting solutions. In last few years, government has consciously encouraged the shift to LED lights, which are economical in the long run and leave a lower carbon footprint. Broadly, the product portfolio of IKIO Lighting Ltd comprises of LED lighting, refrigeration lights, ABS (acrylonitrile butadiene styrene) piping and other products.

IKIO Lighting Ltd is primarily into the ODM (Original Design Manufacturer) segment. The company designs, develops, manufactures, and supplies products to customers. Generally, these first-level customers further distribute the products under their own brands or white labelled brands. Its products are largely in the high-margin premium segment and includes lighting, fittings, fixtures, accessories, and components. The issue is being lead managed by Motilal Oswal Investment Advisors Private Limited. KFIN Technologies will be the registrars to the issue.

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.


Investment/Trading in securities Market is subject to market risk, past performance is not a guarantee of future performance. The risk of loss in trading and investment in Securities markets including Equites and Derivatives can be substantial.
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