Plada Infotech Services IPO GMP (Grey Market Premium)

Plada Infotech Services Ltd is a fixed Price IPO, priced at ₹48 per share and is entirely a fresh issue offering. The ₹12.36 crore IPO of Plada Infotech Services Ltd comprises entirely of a fresh issue with no offer for sale (OFS) component. The fresh issue portion of the IPO entails the issue of 25.74 lakh shares which at the fixed IPO price of ₹48 per share is worth ₹12.36 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹12.36 crore is also the size of the overall IPO.

How to apply for the Plada Infotech Services IPO

The minimum lot size for the IPO investment will be 3,000 shares. Thus, retail investors can invest a minimum of ₹144,000 (3,000 x ₹48 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 6,000 shares and having a minimum lot value of ₹288,000. 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.

Out of the total shares on offer, the company has allocated 1,29,000 shares for the market maker for providing liquidity post listing and reducing basis risk. The net offer (net of market maker allocation) will be distributed between the QIBs, retail investors and the HNI / NII investors. The table below captures the gist of the IPO allocation to various categories.

Like in every SME IPO, the IPO of Plada Infotech Services 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 Rikhav Securities Ltd, who will act as the market maker for the SME IPO of Plada Infotech Services Ltd. The company has set aside 1,29,000 shares for the market maker.

The table below captures the key dates pertaining to the Plada Infotech Services IPO.

The listing will happen in the NSE-SME segment, which is in contrast to the mainboard, and the IPOs of small and medium enterprises (SMEs) are incubated in NSE-SME segment.

About the GMP pricing for Plada Infotech Services Ltd

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 Plada Infotech Services Ltd, we already have GMP data for the last 5 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 Plada Infotech Services IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹20, but now dropped by ₹7. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 29th 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, Plada Infotech Services Ltd has shown good traction in the grey market.

If you consider the fixed IPO price of Plada Infotech Services Ltd at ₹48, then the likely listing price is being signalled at around ₹68 per share as per the GMP indicator on 26th 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 ₹20 on the fixed IPO price of ₹48 indicates a listing premium of a healthy 41.67% for Plada Infotech Services Ltd over the listing price. That pre-supposes a listing price of approximately ₹68 per share, when Plada Infotech Services Ltd lists on 12th October 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 Plada Infotech Services Ltd

Plada Infotech Services Ltd was incorporated in 2010, and offers comprehensive business process outsourcing (BPO) services to clients. Its BPO services fall under 4 broad heads. The first is Merchant Acquisition. This includes onboarding new merchants for BFSI companies, lead based visits, activation monitoring, reporting tools etc. The second is Field Support. This covers offering contract workers to offsite locations to assign, organize and report on critical tasks for the client. The third is recruitment and payroll management. Here, the company offers end-to-end payroll management including disbursals and expense management. Lastly, there is Account Management. This entails managing the processes and compliances associated with merchant engagement & activation; apart from data security. It employs 1,400 personnel and handles 12 branch offices. A lot of the management happens remotely.

The company has been promoted by Shailesh Kumar Damani and Anil Mahendra Kotak. The promoter holding in the company currently stands at 89.50%. However, post the fresh issue of shares, it will get diluted to 62.64%. The fresh issue funds will be used to purchase laptops and accessories for IT development, repayment of loans taken, for working capital gaps and also partially for general corporate purposes. While Indorient Financial Services Ltd will be the lead manager to the issue, Bigshare Services Private Ltd will be the registrar to the issue. The market maker for the issue will be Rikhav Securities Ltd.