Senco Gold IPO GMP (Grey Market Premium)

Senco Gold IPO GMP
Senco Gold IPO GMP

by Tanushree Jaiswal Last Updated: Jul 14, 2023 - 10:05 am 2.9k Views

Senco Gold IPO will be a combination of a fresh issue and an offer for sale (OFS). The price band for the book built issue will be between ₹301 and ₹317. The shares have a face value of ₹10. The fresh issue will entail the issue of 85,17,350 shares, which at the upper end of the price band at ₹317 amounts to a fresh issue size of ₹270 crore. The offer for sale (OFS) component of the IPO will entail the issue of 42,58,675 shares, which at the upper end of the price band at ₹317 amounts to a total OFS size of ₹135 crore. Therefore, the total of Senco Gold IPO will entail the issue of 1,27,76,025 shares, which at the upper end of the price band at ₹317 amounts to a total IPO issue size of ₹405 crore.

The issue opens for subscription on 04th July 2023 and closes for subscription on 06th July 2023 (both days inclusive). The basis of allotment will be finalized on 11th July 2023 and the refunds will be initiated on 12th July 2023. In addition, the demat credits are expected to happen on 13th July 2023 and the stock will list on 14th July 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 Senco Gold Ltd, we already have GMP data for the last 2 days, which should give a reasonable picture of the likely listing performance.

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 Senco Gold Ltd for the 2 days, data is available.

Date GMP
14-July-2023 ₹103
13-July-2023 ₹100
12-July-2023 ₹125
11-July-2023 ₹135
10-July-2023 ₹115
9-July-2023 ₹120
8-July-2023 ₹110
7-July-2023 ₹120
6-July-2023 ₹92
5-July-2023 ₹90
4-July-2023 ₹122
3-July-2023 ₹122
2-July-2023 ₹102
1-July-2023 ₹102
30-June-2023 ₹50
29-June-2023 ₹48

In the above case, the GMP trend shows that the grey market premium has opened at around ₹48, but now its up by ₹103. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 04th July 2023, 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, Senco Gold Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of Senco Gold Ltd at ₹317 as the indicative price, then the likely listing price is being signalled at around ₹367 per share as of the GMP indicator on 30th June 2023. 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 ₹50 on a likely upper band pricing of ₹317 indicates a listing premium of a healthy 15.77% for Senco Gold Ltd over the listing price. That pre-supposes a listing price of approximately ₹367 per share, when Senco Gold Ltd lists on 14th July 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.

Senco Gold Ltd was incorporated in 1994 as a pan-India jewellery retailer and is in the same industry as players like Thangamayil Jewellery and Kalyan Jewellers. The products are current sold under the brand name “Senco Gold & Diamonds.”  Apart from gold and diamond jewellery, Senco also sells jewellery made of silver and platinum, as well as precious and semi-precious stones. It also offers costume jewellery, gold, and silver coins. Currently, Senco Gold Ltd offers over 108,000 designs for gold jewellery and over 46,000 designs for diamond jewellery, which is an elaborate portfolio. It has put in place a pan-Indian team of craftsmen to cater to varying regional and ethnic tastes of Indian customers.

Its key offerings are Everlite (lightweight jewellery), Gossip (silver and fashion) and Aham (jewellery for men). Most of its models cater to the young and the upwardly mobile at an appropriate price tag, which his lower than most jewellery average tags. It has a segment catering to the mass demand for jewellery as well as the D’Signia and Vivaha collections for the creamier market. The company operates through 136 showrooms spread across the length and breadth of India with total area coverage of 409,882 SFT. Around 70 showrooms are owned and operated by the company while 61 are franchises. These showrooms cater to 99 cities spread across 13 states in India. The IPO of Senco Gold Ltd will be lead managed by IIFL Securities, Ambit and SBI Capital Markets. KFIN Technologies Ltd will be the registrar to the issue.

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About the Author

Tanushree is a seasoned professional with 6 years of experience in the Fintech and Edtech industry.


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