Shri Techtex IPO GMP (Grey Market Premium)
Shri Techtex IPO worth ₹45.14 crore, comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO issue. Being a book built IPO, the issue price band has been set in the range of ₹54 to ₹61 per share with IPO issue price to be discovered through book building process. The fresh issue portion entails the issue of 74.00 lakh shares which at the upper band of the IPO price of ₹61 per share is worth ₹45.14 crore. Since there is no OFS portion, the fresh issue size will also the total size of the IPO in the case of Shri Techtex Ltd. The fresh funds raised through the IPO will be used for construction of factory shed, commissioning of solar plant, purchase of machineries, working capital needs and for general corporate purposes. The stock will be listed on the SME segment of the NSE.
The stock of Shri Techtex 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 ₹122,000 in the IPO at the upper band of the IPO price of ₹61 per share. That is also the maximum that a retail investor can bid in the IPO. HNIs and NIIs can bid for minimum of 2 lots of 4,000 shares entailing an investment of ₹244,000. The table below captures the lot sizes permissible.
As per the terms of the offer, 50% of the net offer is reserved for QIB investors, 35% for the retail investors and the balance 15% for the HNI / NII investors. The table below captures this quota allocation for IPO of Shri Techtex Ltd.
|QIB Shares Offered||Not more than 50.00% of the Net offer|
|NII (HNI) Shares Offered||Not less than 15.00% of the Offer|
|Retail Shares Offered||Not less than 35.00% of the Offer|
Shri Techtex IPO is a book built issue with the price of the to discovered in the price band of ₹54 to ₹61 per share. The company has set aside 372,000 shares for the market maker. The market maker typically provides liquidity on the counter of the stock post listing by offering buy and sell quotes on a continuous basis. The name of the market maker is expected to be finalized soon.
The issue opens for subscription on 26th July 2023 and closes for subscription on 28th July 2023 (both days inclusive). The basis of allotment will be finalized on 02nd August 2023 and the refunds will be initiated on 03rd August 2023. In addition, the demat credits are expected to happen on 04th August 2023 and the stock is scheduled to list on 07th August 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.
Shri Techtex GMP details
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 Shri Techtex 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 Shri Techtex IPO for data is available.
In the above case, the GMP trend shows that the grey market premium has opened at around ₹8, and has spiked to ₹30. 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, Shri Techtex Ltd has shown strong price traction in the grey market.
If you consider the upper band of the book built IPO of Shri Techtex Ltd at ₹61, then the likely listing price is being signalled at around ₹75 per share as per the GMP indicator on 21st 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 ₹14 on the upper band of the IPO price of ₹61 per share indicates a listing premium of a very healthy 22.95% for Shri Techtex Ltd over the listing price. That pre-supposes a listing price of approximately ₹75 per share, when Shri Techtex Ltd lists on 07th August 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.
Brief background of Shri Techtex Ltd
Shri Techtex Ltd, is an SME IPO on the NSE which is opening for subscription on 26th July 2023. The company, Shri Techtex Ltd, was incorporated in in the year 2011 to manufacture polypropylene non-woven fabrics in a variety of sizes and densities. Typically, the Polypropylene non-woven fabrics are used for a variety of ecological applications. They find industrial use in areas like organic farming, hospitals, healthcare services, nursing homes, home furnishing, industrial goods, consumer goods etc. The product has a fairly large institutional market where it finds a variety of applications, but limited retail application.
Shri Techtex Ltd started off as a company trading in polymers and eventually graduated to becoming a full-fledged manufacturer of polypropylene woven fabric. It also undertakes manufacturing on a job-work basis on behalf of other manufacturers. The structure of the company underwent a change in 2018 when the entire contract manufacturing business was transferred to Aurum Fabritech. After that, the main company, Shri Techtex Lt is only engaged in one single line of product viz. polypropylene woven fabric; their core bread and butter business.
The fresh issue portion will be used to fund the construction of factory shed, commissioning of the solar plant, purchase of relevant machinery, meeting working capital needs and for general corporate purposes. The issue will be lead managed by Beeline Capital Advisors Private Ltd while Link Intime India Private Ltd will be the registrars to the SME IPO of Shri Techtex Ltd.
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