Kore Digital IPO GMP (Grey Market Premium)
Kore Digital IPO worth ₹18.00 crore comprises entirely of a fresh issue with no component of offer for sale (OFS) by promoters and early shareholders. Kore Digital IPO priced at ₹180 per share. The fresh issue portion entails the issue of 10,00,000 (10 lakh) shares which at the fixed price of the IPO at ₹180 per share is worth ₹18.00 crore. There is no OFS portion, so the total size of the fresh issue is also the overall size of the IPO of Kore Digital Ltd.
The stock of Kore Digital Ltd has a face value of ₹10 and bidders can only bid in minimum lot size of 800 share each, entailing a minimum investment of ₹144,000 in the IPO at the fixed IPO price of ₹180 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 1,600 shares entailing an investment of ₹288,000. The table below captures the lot sizes permissible.
| Application | Lots | Shares | Amount |
|---|---|---|---|
| Retail (Min) | 1 | 800 | ₹144,000 |
| Retail (Max) | 1 | 800 | ₹144,000 |
| HNI (Min) | 2 | 1600 | ₹288,000 |
As per the terms of the offer, 52.6% of the net offer is reserved for the non-retail investors while the balance of 47.4% of the offer is reserved for the retail investors. It is a fixed price issue and the issue price has already been set at ₹180 per share. The table below captures the break-up of the issue size by target investors.
| Other Shares Offered | 526,000 shares (52.60%) |
| Retail Shares Offered | 474,000 shares (47.40%) |
| Total Shares Offered | 1,000,000 shares (100%) |
NNM Securities Ltd will act as the market maker for the SME IPO of Kore Digital Ltd. The company has set aside 52,000 shares for the market maker. This portion will be carved out of the non-retail portion and is included in that quota.
The issue of Kore Digital Ltd opened for subscription on 02nd June 2023 and closes for subscription on 07th June 2023 (both days inclusive). The basis of allotment will be finalized on 12th June 2023 and the refunds will be initiated on 13th June 2023. In addition, the demat credits are expected to happen on 14th June 2023 and the stock is scheduled to list on 15th June 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 Kore Digital 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.
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 Kore Digital IPO for which the data is available.
| Date | GMP |
|---|---|
| 14-June-2023 | ₹48 |
| 13-June-2023 | ₹45 |
| 12-June-2023 | ₹44 |
| 11-June-2023 | ₹35 |
| 10-June-2023 | ₹35 |
| 9-June-2023 | ₹27 |
| 8-June-2023 | ₹27 |
| 7-June-2023 | ₹24 |
| 6-June-2023 | ₹26 |
| 5-June-2023 | ₹6 |
In the above case, the GMP trend shows that the grey market premium has opened at around ₹6, but now its up by ₹48 on the second day on which GMP data is available. 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, Kore Digital Ltd has shown good traction in the grey market.
If you consider the fixed price level of the IPO of Kore Digital Ltd at ₹180, then the likely listing price is being signalled at around ₹192 per share as per the GMP indicator on 06th June 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 ₹12 on the fixed IPO price of ₹180 indicates a listing premium of a moderate to healthy 6.67% for Kore Digital Ltd over the listing price. That pre-supposes a listing price of approximately ₹192 per share, when Kore Digital Ltd lists on 15th June 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.
Here is a quick word on the business model of Kore Digital Ltd. It is one of the key mid-sized telecom infrastructure provider in India, offering high-end communication solutions to corporate and Telecom Network Operators. It operates predominantly in the state of Maharashtra, where it undertakes telecom infrastructure related services like installing and commissioning poles, towers, and optical fibre cable (OFC) Systems across the state. The company has a full-fledged Infrastructure Provider (IP-1) license issued by DOT.
The license is the key to establish and maintain assets; Dark Fibres, right of way, duct space, and towers to grant on lease or rent or sale basis to the licensees of Telecom Network Operators, Broad Band Service Operators, and ISPs. It has laid cables for marquee industry names like Vodafone Idea, Bharti Airtel, Reliance Jio, and Tata Teleservices. The company will use the fresh funds raised via IPO for working capital needs and to make inorganic acquisitions in its business verticals.
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