Jiwanram Sheoduttrai Industries IPO GMP (Grey Market Premium)

Jiwanram Sheoduttrai Industries IPO worth ₹17.07 crore comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO from promoters and early shareholders. It is a fixed price IPO with the IPO price fixed at ₹23 per share. The fresh issue portion of the IPO entails the issue of 74.22 lakh shares which at the fixed IPO price of ₹23 is worth ₹17.07 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹17.07 crore is also the size of the overall IPO.

How to apply for the Jiwanram Sheoduttrai Industries IPO

The stock of Jiwanram Sheoduttrai Industries IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 6,000 share each, entailing a minimum investment of ₹138,000 in the IPO at the fixed IPO price of ₹23 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 12,000 shares entailing an investment of ₹276,000. The table below captures the lot sizes permissible.

As per the terms of the offer, there will be an approximate 5% allocation to the market makers for offering stability in price and liquidity post listing. Out of the net offer (net of the market marking portion), 50% of the net offer is reserved for retail investors and the balance 50% for the non-retail investors. The non-retail portion will predominantly comprise of the HNI / NII investors and to a lesser extent some QIB investors too. The IPO is a fixed price issue with the price already set at ₹23 per share. Allocation is captured below.

Like in every SME IPO, Jiwanram Sheoduttrai Industries IPO 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 are yet to be appointed and the market quota is yet to be designated. However, the normal practice is to allocate nearly 5% of the overall issue size to the market makers.

The issue opens for subscription on 08th September 2023 and closes for subscription on 12th September 2023 (both days inclusive). The basis of allotment will be finalized on 15th September 2023 and the refunds will be initiated on 18th September 2023. In addition, the demat credits are expected to happen on 20th September 2023 and the stock is scheduled to list on 21st September 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 GMP pricing for Jiwanram Sheoduttrai Industries 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 Jiwanram Sheoduttrai Industries 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 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 Jiwanram Sheoduttrai Industries IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹6, and now its up by ₹13. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 08th 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, Jiwanram Sheoduttrai Industries Ltd has shown good traction in the grey market.

If you consider the fixed IPO price of Jiwanram Sheoduttrai Industries Ltd at ₹23, then the likely listing price is being signalled at around ₹29 per share as per the GMP indicator on 05th 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 ₹6 on the fixed IPO price of ₹23 indicates a listing premium of a healthy 26.09% for Jiwanram Sheoduttrai Industries Ltd over the listing price. That pre-supposes a listing price of approximately ₹29 per share, when Jiwanram Sheoduttrai Industries Ltd lists on 21st 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.

Brief on Jiwanram Sheoduttrai Industries Ltd

Jiwanram Sheoduttrai Industries Ltd was incorporated in 1997 and is one of the leading manufacturers of industrial safety gloves and garments. It has a large domestic franchise as well as a major export franchise. Jiwanram Sheoduttrai Industries Ltd has manufacturing units at Baruipur, Nandankanan and at the Falta SEZ in West Bengal. Its exports are predominantly head-to-toe safety wear and workwear. Its operations fall under 3 verticals. Firstly, it makes industrial leather gloves including Canadian welder gloves, driver gloves and mechanical gloves, customized to customer needs. Secondly, it makes customized industrial garments which are fire retardant, water repellent, high visibility, oil repellent, UV protection, anti-bacterial etc. Lastly, Jiwanram Sheoduttrai Industries Ltd also manufactures work and casual wear garments for specific industries like hospitals and hotels on made-to-order basis. It has clients across the US, Spain, Germany, and Belgium.

Over the years, Jiwanram Sheoduttrai Industries Ltd has demonstrated consistent quality and product innovations. Its distribution has deep spread at a domestic and global level. The company is a government recognized Star Export House for manufacture and export of work and safety wear. The manufacturing operations covers the full value chain. This includes procuring & inspecting the raw materials, segregating the raw materials, manufacturing products based on customer specifications, control & product quality assurance as well as the packaging and distribution of the finished products. It gives the company total control over the timing, inventory and quality of the full value chain from procurement of raw materials to delivery of the end product to the customer.

The company was promoted by Alok Prakash, Anupama Prakash, Gyan Prakash and Alok Prakash HUF. The promoter holding in the company currently stands at 100.00%. However, post the fresh issue of shares promoter equity share will dilute to 70.00%. The fresh issue proceeds will be used to meet its working capital gaps and for repayment of unsecured loans availed by the company. Affinity Global Capital Markets Private Ltd will be the lead manager to the issue, while Cameo Corporate Services Ltd will be the registrar to the issue.