Service Care IPO GMP (Grey Market Premium)
Service Care IPO worth comprises ₹20.68 crore, entirely of a fresh issue of shares to investors. The price band has been fixed in the range of ₹63 to ₹67. The fresh issue portion entails the issue of 30.86 lakh shares which at the upper end of the price band at ₹67 is worth ₹20.68 crore. Since there is no offer for sale (OFS) portion in the IPO, the fresh issue portion of ₹20.68 crore is also the total size of the IPO.
The stock of Service Care IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 2,000 share each, entailing a minimum investment of ₹134,000 in the IPO at the upper end of the price band of ₹67 per share. That is also the maximum that a retail investor can bid in the IPO. HNIs, NIIs can bid for minimum of 2 lots of 4,000 shares entailing an investment of ₹268,000. The table below captures the lot sizes permissible.
As per the terms of the offer, not more than 50% of the net offer is reserved for the qualified institutional buyers (QIBs), minimum of 15% of the offer is reserved for the HNI / NII investors and at least 35% is reserved for the retail investors. It is a Book Built issue with the price band and the final price will be discovered through book building process. Swastika Investmart Ltd will act as the market maker for the SME IPO of Service Care Ltd. The company has set aside 156,000 shares for the market maker.
The issue opens for subscription on 14th July 2023 and closes for subscription on 18th July 2023 (both days inclusive). The basis of allotment will be finalized on 21st July 2023 and the refunds will be initiated on 24th July 2023. In addition, the demat credits are expected to happen on 25th July 2023 and the stock is scheduled to list on 26th July 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 Service Care 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 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 Service Care IPO for which data is available.
In the above case, the GMP trend shows that the grey market premium has opened at around ₹3, and now its up by ₹4. 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, Service Care Ltd has shown good traction in the grey market.
If you consider the upper end of band price of the IPO of Service Care Ltd at ₹67 per share, then the likely listing price is being signalled at around ₹69 per share as per the GMP indicator on 11th July 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 on the upper end of the book built IPO price of ₹67 indicates a listing premium of a healthy 2.99% for Service Care Ltd over the listing price. That pre-supposes a listing price of approximately ₹69 per share, when Service Care Ltd lists on 26th June 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.
Here is a quick background of Service Care Ltd. Service Care Ltd, is an SME IPO on the NSE which is opening for subscription on 14th July 2023 and closes on 18th July 2023. The company was incorporated in the year 2011, and it is engaged in offering a full range of support services such as workspace administration services and workforce administration services across a wide range of business domains. Workspace administration service delivers professional services towards facilities management; which is largely into managing the administration and the logistics flow of routine activities in any organization. The workforce management services segment offers end-to-end HRMS & HROS services, designed to solve complex HR challenges.
Service Care Ltd has developed deep insights into this side of the business and has presence in the market for over 23 years in this particular field. The company has established its credibility with its customers and partners over the last few years. Service Care Ltd currently operates through a team of over 5,800 associates (which includes contractual employees). Its clients are spread across various verticals like engineering, education, manufacturing, infrastructure, banking, IT, healthcare, FMCG etc. The company will be using the proceeds from the fresh issue to help meet its working capital expenses as also for general corporate purposes.
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