RBM Infracon IPO GMP (Grey Market Premium)

RBM Infracon IPO, worth Rs. 8.37 crore comprises entirely of a fresh issue of the said amount. The total SME IPO of RBM Infracon Ltd entails the issue of 23.25 lakh shares at a price of Rs. 36 per share aggregating to Rs. 8.37 crore. The stock has a face value of Rs. 10 and bidders can only bid in minimum lot size of 3,000 share each, entailing a minimum investment of Rs. 108,000 in the IPO. That is also the maximum that a retail investor can apply for in the IPO. HNI investors can apply for a minimum of 2 lots implying a minimum bid size of 6,000 shares and entailing an investment value of Rs. 216,000. As per the terms of the offer, 50% of the net offer is reserved for the retail investors and the balance 50% for the HNI (NII) investors. It is a fixed price issue and Sunflower Broking Private Ltd will act as the market maker for the SME IPO of RBM Infracon Ltd.

The issue opens for subscription on 23rd December 2022 and closes for subscription on 27th December 2022 (both days inclusive). The basis of allotment will be finalized on 30th December 2022 and the refunds will be initiated on 02nd January 2023. In addition, the demat credits are expected to happen on 03rd January 2023 and the stock is scheduled to list on 04th January 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 RBM Infracon 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 RBM Infracon Ltd for the 3 days, data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 4, but has since bounced nearly three-fold to Rs. 12 as of the latest price available. This positive momentum in GMP is normally a good sign. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription 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, RBM Infracon Ltd has shown strong limited traction in the grey market.

If you consider the price of the IPO of RBM Infracon Ltd at Rs. 36, then the likely listing price is being signalled at around Rs. 48 per share as per the GMP indicator on 21st December 2022. 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.

The GMP of Rs. 12 on a fixed IPO price of Rs. 36 indicates a listing premium of 33.33% for RBM Infracon Ltd on the listing price. That pre-supposes a listing price of approximately Rs. 48 per share, when RBM Infracon Ltd lists on 04th January 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.

RBM Infracon Limited was incorporated in 2013 and is engaged in engineering, execution, testing, commissioning, operating and maintenance of mechanical and rotary equipment. They basically cater to the oil & gas refineries, cement, fertilizers, Petrochemicals and Coal/Gas based power plants. Apart from the execution and structural work, RBM also undertakes maintenance work for big names like Reliance and Nayara Energy. Its order book stands at over Rs. 320 crore.

The fresh funds will be used for meeting working capital needs. The issue is being lead managed by Beeline Capital Advisors Private Limited. Skyline Financial Services Private Limited will be the registrars to the issue.