Kundan Edifice IPO GMP (Grey Market Premium)
Kundan Edifice IPO worth ₹25.22 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 and the IPO price has been fixed at ₹91 per share. This includes the face value of ₹10 and a premium of ₹81 over the face value. The fresh issue portion of the IPO entails the issue of 27,71,429 shares (27.71 lakh approximately) which at fixed IPO price of ₹91 per share is worth ₹25.22 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹25.22 crore will also be the size of the overall IPO of the company.
How to apply for the Kundan Edifice IPO
The company has apportioned the net IPO equally between the retail investors and the non-retail investors. The non-retail investors predominantly comprise of the HNI / NII investors and to a lesser extent of some select QIB investors also. While the market maker portion is yet to be decided, it is normally around 5% of the total gross issue size. Here is how the break-up of allocation will look like.
|Market Maker shares offered||Approximately 5.00% of the Offer Size|
|Retail shares offered||Approximately 47.50% of the overall offer size|
|Non-retail shares offered||Approximately 47.50% of the overall offer size|
The minimum lot size for the IPO investment will be 1,200 shares. Thus, retail investors can invest a minimum of ₹1,09,200 (1,200 x ₹91 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 2,400 shares and having a minimum lot value of ₹2,18,400. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.
Like in every SME IPO, the Kundan Edifice IPO also has a market maker. However, in this case, the market maker is yet to be appointed and the shares allocated to the market maker is also yet to be decided. The general practice is to allocate 5% of the overall issue size to the market maker as their inventory for providing buy and sell quotes and providing stability to the price of the stock post listing.
The issue opens for subscription on 12th September 2023 and closes for subscription on 15th September 2023 (both days inclusive). The basis of allotment will be finalized on 21st September 2023 and the refunds will be initiated on 22nd September 2023. In addition, the demat credits are expected to happen on 25th September 2023 and the stock is scheduled to also list on 26th 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 Kundan Edifice 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 Kundan Edifice 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 the GMP of Kundan Edifice IPO 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 Kundan Edifice IPO for which the data is available.
|Date||Grey Market Price (GMP)|
In the above case, the GMP trend shows that the grey market premium has opened at around ₹34, but now its up by ₹16. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 12th 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, Kundan Edifice Ltd has shown good traction in the grey market.
If you consider the fixed price of the IPO of Kundan Edifice Ltd at ₹91, then the likely listing price is being signalled at around ₹125 per share as per the GMP indicator on 07th 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 ₹34 on the fixed IPO price of ₹91 indicates a listing premium of a healthy 37.36% for Kundan Edifice Ltd over the listing price. That pre-supposes a listing price of approximately ₹115 per share, when Kundan Edifice Ltd lists on 26th 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 business model of Kundan Edifice Ltd
Kundan Edifice Ltd was incorporated in 2010 and is engaged in the manufacturing, assembly and marketing of light emitting diodes (LED) strip lights. Kundan Edifice Ltd is classified as an ODM company or an Original Design Manufacturer company. It designs, develops, and manufactures these LED light strips at its own facilities and then supplies it to other client companies to distribute under their own brand names. In fact, many of the large brands also avail the services of the company. Kundal Edifice Ltd also provides specialized customized products like HV(high voltage) Flex, LV (low voltage) flex, RGB Flex and complete accessories kit. Kundan Edifice Ltd has 2 manufacturing and assembly facilities located at Vasai and Bhiwandi in Maharashtra. The company employs 275 workers, including contract workers.
Kundan Edifice Ltd has positioned itself as a one-stop solution for all lighting needs. The solution offered to clients includes tech info clarity, drawing design, sample for confirmation, production trails, actual production, branding, packaging, and all relevant logistics management. The products manufactured by Kundan Edifice Ltd find application in areas like cove lighting, profile lighting, car interiors, car exteriors, two-wheelers, indoor decorations, festival decorations, signages, back-lit panel for outdoor advertising, outdoor decorations, underwater lighting, decoration of building facades, lighting for construction demarcation, neon flex lights and other decorative lights and articles.
Kundan Edifice Ltd was promoted by Divyansh Gupta and Vijaya Gupta while Mallika Gupta and Shubhang Gupta are part of the promoter group. The promoter holding (including the promoter group) stands at 99% pre-IPO. However, post the fresh issue of shares, the promoter share will be diluted. The fresh issue funds will be used by the company for meeting the incremental working capital needs as well as for general corporate purposes. Fedex Securities Private Ltd will be the lead manager to the issue, while Cameo Corporate Services Ltd is the registrar to the issue.
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