ROX Hi-Tech IPO GMP (Grey Market Premium)

About the ROX Hi-Tech IPO

ROX Hi-Tech IPO opens for subscription on 07th November 2023 and closes on 09th November 2023. The company has a face value of ₹10 per share and it is a book built IPO with the price band for the IPO set in the range of ₹80 to ₹83 per share. The final IPO price will be discovered in this range. The IPO of ROX Hi-Tech Ltd has a fresh issue component as well as an offer for sale (OFS) portion. As part of the fresh portion of the IPO, ROX Hi-Tech Ltd will issue 60,17,600 shares (60.18 lakh shares approximately), which at the upper IPO price band of ₹83 per share aggregates to fresh fund raising of ₹49.95 crore. The offer for sale (OFS) will entail the promoter shareholders selling a total of 5,47,200 shares (5.47 lakh shares approximately), which at the upper IPO price band of ₹83 per share aggregates to total OFS size of ₹4.54 crore. The overall size of the IPO of ROX Hi-Tech Ltd will, therefore entail the issue and sale of 65,64,800 shares (65.65 lakh shares approximately), which at the upper IPO band price of ₹83 per share aggregates to a total IPO size of ₹54.49 crore overall.

Like every SME IPO, ROX Hi-Tech IPO also has a market making portion with an inventory allocation of 8,48,000 shares. The market maker for the issue is yet to be announced and they will provide two-way quotes to ensure liquidity on the counter and low basis costs post listing. The promoter quota currently stands at 83.29%, which will get diluted to 58.95% post the IPO. ROX Hi-Tech Ltd will use the fresh funds to set up network operations centres, ongoing capex and to set up a medical automation centre in Chennai. It is also planning to use the funds for a global software delivery centre in Noida. Swaraj Shares and Securities Private Ltd will be the lead manager to the issue, and Purva Share Registry India Private Ltd will be the registrar to the IPO.

About the GMP pricing for ROX Hi-Tech IPO

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 ROX Hi-Tech 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 the 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 ROX Hi-Tech Ltd for the 2 days, data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹30 per share, but has since rallied sharply to ₹75 for which GMP data is available. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 07th November 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, ROX Hi-Tech Ltd has shown good traction in the grey market. Also, the IPO price has just been announced on Wednesday, so we must give some time for the prices to settle down and be able to reflect the pros and cons of the stock value.

If you consider the upper band price of the IPO of ROX Hi-Tech Ltd at ₹83 per share, then the likely listing price is being signalled at around ₹133 per share as per the GMP indicator on 02nd November 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. Normally, the experience in the past has been that when the subscription ratio is much better than expected, it results in a surge in the grey market pricing (GMP).

The GMP of ₹50 on the upper band IPO price of ₹83 indicates a listing premium of a healthy 60.24% for ROX Hi-Tech Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹133 per share, when ROX Hi-Tech Ltd lists on 17th 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 ROX Hi-Tech Ltd Solutions IPO?

The minimum lot size for the IPO investment will be 1,600 shares. Thus, retail investors can invest a minimum of ₹132,800 (1,600 x ₹83 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 3,200 shares and having a minimum lot value of ₹265,600. 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.

ROX Hi-Tech Ltd has allocated 12.92% of the issue size for the market makers to the issue. The net offer (net of market maker allocation) will be divided between the qualified institutional buyers (QIBs), retail investors and the HNI / NII investors. The breakdown of the allocation to various categories of investors in the ROX Hi-Tech Ltd IPO are as under.

The issue opens for subscription on 07th November 2023 and closes for subscription on 09th November 2023 (both days inclusive). The basis of allotment will be finalized on 15th November 2023 and the refunds will be initiated on 16th November 2023. In addition, the demat credits are expected to happen on 17th November 2023 and the stock is scheduled to also list on 20th 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.