Proventus Agrocom IPO GMP (Grey Market Premium)

Proventus Agrocom IPO, worth ₹69.54 crore comprises of a fresh issue and an offer for sale (OFS) by promoters and early shareholders. The issue is a fixed price issue and the issue price has been set at ₹771 per share. The fresh issue portion entails the issue of 671,773 lakh shares which at the fixed price of ₹771 is worth ₹51.79 crore. The OFS portion entails the issue of 230,140 lakh shares which at the fixed price of the IPO at ₹771 is worth ₹17.74 crore. Overall, the IPO entails the issue of 901,920 lakh shares, which at the fixed IPO price of ₹771 per share works out to total issue size of ₹69.54 crore.

The stock of Proventus Agrocom has a face value of ₹10 and bidders can only bid in minimum lot size of 160 shares each, entailing a minimum investment of ₹123,360 in the IPO at fixed price level of ₹771 per share. That is also the maximum that a retail investor can bid in the IPO. HNIs, NIIs can bid for minimum of 2 lots of 320 shares entailing an investment of ₹246,720. The table below captures the lot sizes permissible.

As per the terms of the offer, 47.50% of the net offer is reserved for the retail investors while the balance of 52.50% of the net offer is reserved for the HNI/NII and other investors in the SME IPO of Proventus Agrocom Ltd. It is a fixed price issue with the price of the IPO already fixed at Rs771 per share. Ajcon Global Services Ltd will act as the market maker for the SME IPO of Proventus Agrocom Ltd. The company has set aside 45,120 shares for the market maker and this quota will be eventually reduced from the HNI / NII quota in the IPO.

The issue opened for subscription on 24th May 2023 and closes for subscription on 26th May 2023 (both days inclusive). The basis of allotment will be finalized on 31st May 2023 and the refunds will be initiated on 01st June 2023. In addition, the demat credits are expected to happen on 02nd June 2023 and the stock is scheduled to list on the stock exchange on 05th June 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 Proventus Agrocom 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.

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 Proventus Agrocom Ltd for the 2 days, data is available.