IRM Energy IPO GMP (Grey Market Premium)

The stock of IRM Energy Ltd has a face value of ₹10 per share and the price band for the book building IPO has been set in the range of ₹480 to ₹505 per share. The final price will be discovered within this band through the process of book building. The IPO of IRM Energy Ltd will be entirely a fresh issue of shares with no offer for sale (OFS) component in the IPO. In the case of IRM Energy Ltd IPO, the fresh issue portion comprises the issue of 1,08,00,000 shares (1.08 crore shares), which at the upper price band of ₹505 per share will translate into fresh issue size of ₹545.40 crore. Since there is no offer for sale (OFS) portion the fresh issue size will also be the size of the overall IPO. Hence, the overall IPO portion will also comprise of the issue of 1,08,00,000 shares (1.08 crore shares), which at the upper price band of ₹505 per share will translate into a total IPO issue size of ₹545.40 crore.

About the GMP pricing for IRM Energy IPO

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 IRM Energy Ltd, we already have GMP data for the last 2 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 IRM Energy IPO 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 IRM Energy IPO for which data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹105, but dropped by ₹18. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 20th October 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, IRM Energy Ltd has shown good traction in the grey market.

If you consider the upper end of band price of the IPO of IRM Energy Ltd at ₹505, then the likely listing price is being signalled at around ₹610 per share as per the GMP indicator on 11th October 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 ₹105 on the upper end of the book built IPO price of ₹505 indicates a listing premium of a healthy 20.79% for IRM Energy Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹610 per share, when IRM Energy Ltd lists on 31st October 2023. Of course, these are purely 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 instead of just the GMP absolute numbers.

How to apply for the IRM Energy IPO

Lot size is the minimum number of shares that the investor has to put in as part of the IPO application. The lot size only applies for the IPO and once it is listed then it can be even traded in multiples of 1 shares since it is a mainboard issue. Investors in the IPO can only invest in minimum lot size and in multiples thereof. In the case of IRM Energy Ltd, the minimum lot size is 29 shares with upper band indicative value of ₹14,645. The table below captures the minimum and maximum lots sizes applicable for different categories of investors in the IPO of IRM Energy Ltd.

It may be noted here that for the B-HNI category and for the QIB (qualified institutional buyer) category, there are no upper limits applicable.

As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyers (QIBs), while only 35% of the total issue size is reserved for the retail investors. The residual 15% is kept aside for the HNI / NII investors . The stock of IRM Energy Ltd will be listed on the NSE and on the BSE. The table below captures the gist of the allocation to various categories.

It must be noted here that the anchor allocation portion in the above issue of IRM Energy will be carved out of the QIB portion and the QIB public issue portion will be proportionately reduced to the extent of the anchor placement.

The IPO of IRM Energy Ltd opens for subscription on 18th October 2023 and closes for subscription on 20th October 2023 (both days inclusive). The basis of allotment will be finalized on 27th October 2023 and the refunds will also be initiated on 27th October 2023. In addition, the demat credits are expected to happen on 30th October 2023 and the stock is scheduled to also list on 31st October 2023 on the NSE and the BSE.