Kontor Space IPO GMP (Grey Market Premium)

The ₹15.62 crore IPO of Kontor Space Ltd 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 issue and the fixed price of the IPO has been set at ₹93 per share. The fresh issue portion of the IPO entails the issue of 16.80 lakh shares which at the fixed IPO price of ₹93 per share is worth ₹15.62 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹15.62 crore is also the size of the overall IPO.

How to apply for the Kontor Space IPO?

The stock of Kontor Space IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 1,200 share each, entailing a minimum investment of ₹111,600 in the IPO at the fixed IPO price of ₹93 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 2,400 shares entailing an investment of ₹223,200. The table below captures the lot sizes permissible.

Out of the total shares on offer, the company has allocated 86,400 shares for the market maker for providing liquidity post listing and reducing basis risk. The net offer (net of market maker allocation) will be distributed between the retail investors and the HNI / NII investors. The table below captures the gist of the IPO allocation to various categories.

Like in every SME IPO, the IPO of Kontor Space Ltd 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 makers will be Rikhav Securities Ltd, who will act as the market maker for the SME IPO of Kontor Space Ltd. The company has set aside 86,400 shares for the market maker.

The table below captures the key dates pertaining of Kontor Spaces IPO.

The listing will happen in the NSE-SME segment, which is in contrast to the mainboard, and the IPOs of small and medium enterprises (SMEs) are incubated in NSE-SME segment.

About Kontor Space IPO GMP

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 Kontor Space 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.

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 Kontor Space IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹30, and now its dropped by ₹3. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 27th 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, Kontor Space Ltd has shown good traction in the grey market.

If you consider the fixed IPO price of Kontor Space IPO at ₹93, then the likely listing price is being signalled at around ₹123 per share as per the GMP indicator on 25th 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 ₹30 on the fixed IPO price of ₹93 indicates a listing premium of a healthy 32.26% for Kontor Space Ltd over the listing price. That pre-supposes a listing price of approximately ₹123 per share, when Kontor Space Ltd lists on 10th October 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.

Read about Kontor Space IPO

Brief on Kontor Space Ltd

Kontor Space Ltd was incorporated in the year 2018, and offers renting and management of commercial spaces. It operates on space as a service (SAAS) model. Kontor Space Ltd either purchases the property or takes it on lease and then sub-leases the property to either a single client or to multiple clients. It offers workspaces for various sizes and needs and offers with and without furnishing. Most of the billing is done on per-seat basis. Its co-working spaces are operated across 4 locations. While 2 are located at Fort and BKC in Mumbai, the other two are located at Thane and in Pune. It typically offers spaces that are well connected and offer the right environment for work, meetings, conferences etc. Kontor Space Ltd has optimum capacity of over 1,200 seats across its 4 centres.

The company has been promoted by Kanak Mangal and Neha Mittal. The promoter holding in the company currently stands at 98.20%. However, post the fresh issue of shares, the promoter equity holding share will get diluted to 71.50%. The fresh issue funds will be used by the company for rental deposits of new co-working spaces, capex for fit-outs at the new co-working centres and also partially for general corporate purposes. While Srujan Alpha Capital Advisors LLP will be the lead manager to the issue, Cameo Corporate Services Ltd will be the registrar to the issue. The market maker for the issue will be Rikhav Securities Ltd.