On Door Concepts IPO GMP (Grey Market Premium)

The IPO of On Door Concepts Ltd opens on 23rd October 2023 and closes for subscription on 27th October 2023. It is a fixed price IPO with a face value of ₹10 per share and a fixed IPO price of ₹208 per share. The IPO of On Door Concepts Ltd has only a fresh issue component with no book built portion. As part of the fresh issue portion of the IPO, On Door Concepts Ltd will issue a total of 14,98,800 shares (14.99 lakh shares approximately), which at the fixed IPO price of ₹208 per share aggregates to a fresh issue size of ₹31.18 crore. Since there is no offer for sale portion, the fresh issue will also be the total size of the IPO. Hence the total IPO size will comprise of 14,98,800 shares, which at the fixed IPO price of ₹208 per share aggregates to a total IPO size of ₹31.18 crore.

Like in any SME IPO, this issue of On Door Concepts Ltd will also have a market making portion. The market maker allocation will be 86,400 shares and the market maker for the issue is BHH Securities Ltd. The market maker will provide two-way quotes to ensure liquidity on the counter post listing, coupled with low basis costs. The promoter holding in On Door Concepts Ltd currently stands at 51.92%, which will be diluted to 38.14%, post the IPO. On Door Concepts Ltd will use the fresh funds for meeting additional working capital expenses, apart from general corporate expenses. First Overseas Capital Ltd is the lead manager to the issue and Bigshare Services Private Ltd is the registrar to the issue.

About the GMP pricing for On Door Concepts Ltd Solutions

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 On Door Concepts IPO, 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 On Door Concepts IPO, data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹25, but now up by ₹15. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 23rd October 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, On Door Concepts Ltd has shown good traction in the grey market.

If you consider the fixed price of the On Door Concepts IPO at ₹208 per share, then the likely listing price is being signalled at around ₹233 per share as per the GMP indicator on 17th October 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 ₹25 on the fixed IPO price of ₹208 indicates a listing premium of a healthy 12.02% for On Door Concepts Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹233 per share, when On Door Concepts Ltd lists on 06th November 2023. Of course, these are purely 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 the absolute numbers.

How to apply for the On Door Concepts Ltd Solutions IPO

The minimum lot size for the IPO investment will be 600 shares. Thus, retail investors can invest a minimum of ₹124,800 (600 x ₹208 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 1,200 shares and having a minimum lot value of ₹249,600. 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.

As per the terms of the offer; 5.76% of the total issue size is reserved for the Market Makers, 47.12% of offer size for the HNI / NII investors and the balance 47.12% is reserved for the retail investors. It is a fixed price issue with the IPO price already being fixed in advance, so there is no price discovery in this issue of On Door Concepts Ltd.

Like in every SME IPO, the IPO of On Door Concepts 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 BHH Securities Ltd, will act as the market maker for the SME IPO of On Door Concepts Ltd. The company has set aside 86,400 shares for the market maker.

The issue opens for subscription on 23rd October 2023 and closes for subscription on 27th October 2023 (both days inclusive). The basis of allotment will be finalized on 01st November 2023 and the refunds will be initiated on 02nd November 2023. In addition, the demat credits are expected to happen on 03rd November 2023 and the stock is scheduled to also list on 06th November 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.