Sahaj Fashions IPO GMP (Grey Market Premium)

Sahaj Fashions IPO has a fresh issue component and a book built portion. While the fresh issue portion is EPS dilutive and equity dilutive, the OFS is just a transfer of ownership and  hence it is not value dilutive for the shareholders. The stock of Sahaj Fashions has a face value of ₹10 per share and it is a fixed price issue. The issue price for the IPO has been set at a fixed rate of ₹30 per share. Let us now turn to the size of the issue.

As part of the fresh portion of the IPO, Sahaj Fashions will issue a total of 44,76,000 shares (44.76 lakhs), which at the fixed price of ₹30 per share aggregates to a total fund raising of ₹13.43 crore. The offer for sale portion is relatively smaller. The OFS entails the issue 1,76,000 shares (1.76 lakhs), which  at the fixed price of ₹30 per shares translates into a total OFS issue size of ₹0.53 crore. As a result, the total size of the IPO will comprise the issue of 46,52,000 shares (46.52 lakhs), which at the fixed price of ₹30 per share aggregates to a total IPO issue size of ₹13.96 crore for the Sahaj Fashions IPO.

How to apply for the Sahaj Fashions IPO

The minimum lot size for the IPO investment will be 4,000 shares. Thus, retail investors can invest a minimum of ₹120,000 (4,000 x ₹30 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 8,000 shares and having a minimum lot value of ₹240,000. 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.

The company has allocated around 5.07% of the issue size for the market makers, 47.47% for the retail investors and the balance 47.46% for the HNI / NII investors or the non-retail investors in the Sahaj Fashions IPO. The break up in terms of minimum and maximum allowed quota has been captured in the table below.

Since there is no anchor allocation, the entire shares are available for the issue to the public shareholders.

Market Making and key IPO dates for Sahaj Fashions Ltd

Like in every SME IPO, Sahaj Fashions IPO 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 NNM Securities Ltd, who will act as the market maker for the SME IPO of Sahaj Fashions Ltd. The company has set aside 236,000 shares for the market maker.

The issue opens for subscription on 25th August 2023 and closes for subscription on 29th August 2023 (both days inclusive). The basis of allotment will be finalized on 01st September 2023 and the refunds will be initiated on 04th September 2023. In addition, the demat credits are expected to happen on 05th September 2023 and the stock is scheduled to also list on 06th September 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.

About the GMP pricing for Sahaj Fashions 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 Sahaj Fashions 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.

How has the Sahaj Fashions IPO GMP panned out in last few days

Sahaj Fashions IPO 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 Sahaj Fashions IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹2, but now its down by ₹3. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 25th August 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, Sahaj Fashions Ltd has shown good traction in the grey market.

If you consider the IPO price of Sahaj Fashions Ltd at ₹30 per share, then the likely listing price is being signalled at around ₹32.50 per share as per the GMP indicator on 22nd August 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 ₹2.50 on the fixed IPO price of ₹30 for Sahaj Fashions indicates a listing premium of a moderately healthy 8.33% for Sahaj Fashions Ltd over the listing price. That pre-supposes a listing price of approximately ₹32.50 per share, when Sahaj Fashions Ltd lists on 06th September 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.

Read about Sahaj Fashions IPO

Brief on Sahaj Fashions Ltd

Sahaj Fashions Ltd  was incorporated in 2011 to manufacture fabric for garment making, home furnishings, and a variety of industrial applications. Apart from manufacturing cotton suiting and shirting fabric, Sahaj Fashions Ltd also makes polyester-based and cotton-polyester blended fabrics. Its product that is in high demand from the garments manufacturers is the cotton yarn-dyed fabrics. It has its manufacturing unit located on the Kishangarh Bhilwara Express Highway, near Ajmer in Rajasthan.

The company has built a complete infrastructure ecosystem for top class performance and delivery to customers. It has high speed air jet looms, compressors for supply of best quality air, humidification plant to suit cotton fabrics manufacturing at high speed and a lot more. For the weaving preparatory jobs, the company has installed sectoral warping machines, apart from two direct warping machines for cone unwinding and warping. Sizing of all types of yarn is done through PLC based sizing machines while there is also a complete DG set power back-up system to ensure uninterrupted power supply to the unit.

The fresh issue funds will be used by the company for meeting its working capital funding gaps and for prepayment of certain secured borrowings. Part of the funds raised will also go towards general corporate expenses. While Khambatta Securities 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 is NNM Securities Ltd.