PKH Ventures IPO GMP (Grey Market Premium)
The ₹379 crore of PKH Ventures IPO comprises of an offer for sale and also of a fresh issue of shares. The offer for sale (OFS) component is by the promoters and early shareholders of the company. Here it must be noted that while the fresh issue component infuses fresh funds into the company, it also is EPS dilutive and equity dilutive. On the other hand, the OFS is just a transfer of shares so there is no fresh infusion of funds, but it also does not dilute the equity. The issue has been priced in the band of ₹140 to ₹148 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process. For our analysis, the upper end of the band is assumed.
Let us now look at the details of the issue of PKH Ventures IPO. The fresh issue will entail the issue of 1,82,58,400 shares of the company, which at the upper end of the price band of ₹148 works out to a new issue value of ₹270 crore. The offer for sale (OFS) will entail the sale of 73,73,600 shares of the company, which at the upper end of the price band of ₹148 works out to an OFS sale value of ₹109 crore. Thus, the overall IPO of PKH Ventures will entail the issue of 2,53,62,000 shares, which at the upper end of the price band of ₹148 works out to an aggregate issue size of ₹379 crore
The issue opens for subscription on 30th June 2023 and closes for subscription on 04th July 2023 (both days inclusive). The basis of allotment will be finalized on 07th July 2023 and the refunds will be initiated on 10th July 2023. In addition, the demat credits are expected to happen on 11th July 2023 and the stock is scheduled to list on 12th July 2023 on the NSE and the BSE. 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 PKH Ventures Ltd, we already have GMP data for the last 2 days, which should give a reasonable picture of the likely listing performance.
There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, which includes the levels of the Nifty and Sensex as well as the general IPO market and macro conditions. Secondly, the extent of subscription for the IPO across the retail and the QIB segments also has a deep impact on the GMP as it is indicative of investor interest in the stock. Generally, strong QIB subscription is a trigger for a spike in GMP.
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 PKH Ventures IPO for which data is available.
In the above case, the GMP trend shows that the grey market premium has opened at around ₹6, but now its up by ₹9. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 30th June 2023, 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, PKH Ventures Ltd has shown very moderate traction in the grey market.
If you consider the upper end of the price band of PKH Ventures Ltd at ₹148 as the indicative price, then the likely listing price is being signalled at around ₹155 per share as of the GMP indicator on 27th June 2023. One data point to track will be the subscription update on the stock as that would chart the GMP course from here. As mentioned, the institutional QIB subscription is a key trigger for the GMP pricing.
The GMP of ₹7 on a likely upper band pricing of ₹148 indicates a listing premium of a very moderate 4.73% for PKH Ventures Ltd over the listing price. That pre-supposes a listing price of approximately ₹155 per share, when PKH Ventures Ltd lists on 12th July 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.
GMP (grey market price) is an important indicator, albeit informal, of likely listing price. One cannot take this price at face value However, the GMP tends to be quite dynamic and changes direction with the flow of news and events. Investors must note here that this is just an informal indication and has no official acceptance. 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.
PKH Ventures Ltd was incorporated in the year 2000 and is engaged in the business of Construction & Development, Hospitality, and Management Services. Broadly, its two major verticals are the construction vertical and the hospitality and facilities management vertical. PKH Ventures Ltd executes civil construction works on part of some of the biggest realtors in India. Civil construction contracts are executed by its construction arm, Garuda, which basically undertakes such third party construction projects. A recent marquee project was the development of the Delhi Police Headquarters in April 2021, entailing the construction of two towers of 17 storeys each, with complete glass façade and steel bridge connection.
PKH Ventures will also develop its own projects, including real estate development at Amritsar, food park at Jalore in Rajasthan, cold storage facility at Indore and a wellness centre at Chiplun in Maharashtra. Its second vertical of hospitality and facilities management is conducted under the aegis of PKH Ventures' Hospitality. It owns, manages, and operates hotels, restaurants, QSRs and spas. PKH Ventures Ltd also provides additional services like mechanical, electrical, and plumbing works; apart from annual maintenance contracts. It has developed the Golden Chariot Hotel & Spa, Vasai, and Golden Chariot Boutique Hotel near Mumbai International Airport. The issue is being lead managed by IDBI Capital Market Services Limited. Link Intime India Private Limited will be the registrars.
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