Sah Polymers IPO GMP (Grey Market Premium)

Sah Polymers IPO GMP
Sah Polymers IPO GMP

by 5paisa Research Team Last Updated: Jan 12, 2023 - 11:27 am 4.5k Views

Sah Polymers IPO worth Rs. 66.30 crore comprises entirely of a fresh offer of shares of the said amount. There is no offer for sale (OFS) component in this IPO. The new issue funds will be used to set up a new manufacture a new variant of flexible intermediate bulk containers. 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 Rs. 61 to Rs. 65 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process.

The issue opens for subscription on 30th December 2022 and closes for subscription on 04th January 2023 (both days inclusive). The basis of allotment will be finalized on 09th January 2023 and the refunds will be initiated on 10th January 2023. In addition, the demat credits are expected to happen on 11th January 2023 and the stock is scheduled to list on 12th January 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 Sah Polymers Ltd, we already have GMP data, which should give a reasonable picture of the likely listing performance.

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Sah Polymer IPO

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 Sah Polymers IPO, data is available.

Date

GMP

12-Jan-2023

Rs. 10

11-Jan-2023

Rs. 10

10-Jan-2023

Rs. 5

09-Jan-2023

Rs. 7

08-Jan-2023

Rs. 4

07-Jan-2023

Rs. 4

06-Jan-2023

Rs. 3

05-Jan-2023

Rs. 3

04-Jan-2023

Rs. 6

03-Jan-2023

Rs. 5

02-Jan-2023

Rs. 6

01-Jan-2023

Rs. 5

31-Dec-2022

Rs. 5

30-Dec-2022

Rs. 8

29-Dec-2022

Rs. 6

28-Dec-2022

Rs. 6

27-Dec-2022

Rs. 5

26-Dec-2022

Rs. 4

 

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Sah Polymer IPO

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 4, but has since oscillated between the levels of Rs. 4 and Rs. 10 showing a gradual uptrend in the price. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 30th December 2022, 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, Sah Polymers Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of Sah Polymers Ltd at Rs. 65 as the indicative price, then the likely listing price is being signalled at around Rs. 71 per share as of the GMP indicator on 28th December 2022. 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 Rs. 6 on a likely upper band pricing of Rs. 65 indicates a listing premium of a relatively healthy 9.23% for Sah Polymers Ltd over the listing price. That pre-supposes a listing price of approximately Rs. 71 per share, when Sah Polymers Ltd lists on 12th 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.

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.

Sah Polymers Ltd was Incorporated in the year 1992 and the company is primarily engaged in manufacturing and selling of Polypropylene (PP), High-Density Polyethylene (HDPE) FIBC Bags, Woven Sacks, HDPE/PP woven fabrics and woven polymer. It offers bulk packaging solutions for B2B manufacturers mainly catering to complex industries like Pesticides, Basic Drugs, Cement, Chemicals, Fertilizers, Food Products, Textiles, Ceramics and Steel. Sah Polymers Limited caters to domestic sales in 6 states and 1 union territory for the domestic market and exports to 6 regions including Africa, the Middle East, Europe, the US, Australia and the Caribbean.

The company plans to use the fresh funds to bankroll the flexible intermediate bulk containers (FIBC) plant as well as to repay or prepay its debt. The company has just one manufacturing facility with installed capacity of 3,960 MTPA in Udaipur, Rajasthan. The issue is being lead managed by Pantomath Capital Advisors. Link Intime India will be the registrars to the issue.


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