Nirman Agri Genetics IPO GMP (Grey Market Premium)

Nirman Agri Genetics IPO, worth Rs. 20.30 crore on the NSE comprises entirely of a fresh issue of the IPO amount. The total SME IPO of Nirman Agri Genetics Ltd entails the issue of 20.508 lakh shares at a price of Rs. 99 per share aggregating to Rs. 20.30 crore. The stock has a face value of Rs. 10 and retail bidders can only bid in minimum lot size of 1,200 shares, entailing a minimum investment of Rs. 118,800 in the SME IPO. That is also the maximum that a retail investor can apply for in the IPO. The HNI / NII investors can apply for a minimum of 2 lots of 2,400 shares at a minimum investment of Rs. 237,500 per applicant. As per the terms of the offer, 50% of the net offer is reserved for the retail investors. It is a fixed price issue and NNM Securities Private Limited will act as the market maker for the SME IPO of Nirman Agri Genetics Ltd. They will have a market maker portion of 104,400 shares, as quota allotted to them.

The issue opens for subscription on 15th March 2023 and closes for subscription on 20th March 2023 (both days inclusive). The basis of allotment will be finalized on 23rd March 2023 and the refunds will be initiated on 24th March 2023. In addition, the demat credits are expected to happen on 27th March 2023 and the stock is scheduled to list on 28th March 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 Nirman Agri Genetics 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.

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 Nirman Agri Genetics IPO for which the GMP data is available.

In the above case, the GMP trend shows that the grey market premium has been extremely volatile and we may need more stability before arriving at a judgement. GMP opened at Rs. 3 but has then dipped to Rs. -5. We must wait for the actual subscription numbers to flow in when the issue opens for subscription and 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, Nirman Agri Genetics IPO has shown traction in the grey market, although the start has been too volatile in terms of prices.

If you consider the fixed price of the Nirman Agri Genetics IPO at Rs. 99, then the likely listing price is being signalled at around Rs. 101.50 per share as per the GMP indicator on 15th March 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 from here.

Nirman Agri Genetics IPO GMP of Rs. 2.50 on a fixed IPO price of Rs. 99 indicates a listing premium of a very tepid 2.53% for Nirman Agri Genetics Ltd over the listing price. That pre-supposes a listing price of approximately Rs. 101.50 per share, when Nirman Agri Genetics Ltd lists on 28th March 2023. Of course, these are approximations, so you must keep a margin of safety. However, that would depend on the GMP sustaining over the next few days after the issue opens. The best thing one can do with the GMP is to observe the trend closely as that gives the best hints on listing status. Focus on the time series trend than on numbers. However, the high levels of volatility could make the GMP hard to rely on this indicator for likely listing price.

Nirman Agri Genetics IPO was just started in the year 2020, and it is an organized Agri-Input Company in India. Among the business lines of Nirman Agri Genetics are production, processing, and marketing of high-quality hybrid seeds, Pesticides, and Bio-organics. These are used to enhance the yields of different crops like corn, sunflower, cotton, paddy, grain sorghum, etc. It has also recently forayed into the area of micronutrients and Bioproducts; apart from producing non-hybrid seeds for paddy. Its owned and outsourced manufactured operations are spread across Maharashtra, Gujarat, and Madhya Pradesh.

Nirman Agri Genetics is positioning itself as a leading crop solutions provider for farmers with high-yielding hybrid seeds and crop management handling the task of enhancing yields through the agri cycle of the crop. The funds will be used for additional working capital and also for organic and inorganic growth, apart from purchase of hardware equipment. Post the IPO, the promoter share in equity will dilute from 99.99% to 65.59%. The issue is being lead managed by First Overseas Capital Ltd while Bigshare Services Private Limited will be the registrars to the issue.