SignatureGlobal India IPO GMP (Grey Market Premium)

SignatureGlobal India IPO worth ₹730 crore comprises of an offer for sale and also of a fresh issue of shares. The offer for sale (OFS) component is by the early investors in the company, with the entire OFS portion being offered by International Finance Corporation (IFC). 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 ₹366 to ₹385 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process. For our analysis, the upper end of the IPO price band is assumed.

Details of the SignatureGlobal (India) IPO

Let us now look at the details of the SignatureGlobal IPO issue. The IPO of  SignatureGlobal (India) Ltd will be a combination of a fresh issue and an offer for sale (OFS). The fresh issue portion comprises the issue of 1,56,62,338 shares (156.62 lakh shares approximately), which at the upper price band of ₹385 per share will translate into fresh issue size of ₹603 crore. The offer for sale (OFS) portion of the IPO comprises the sale of 32,98,701 shares (32.99 lakh shares approximately), which at the upper price band of ₹385 per share will translate into an offer for sale (OFS) size of ₹127 crore. The sole selling shareholder in the OFS is International Finance Corporation (IFC). Therefore, the overall IPO portion will comprise of the issue of 1,89,61,039 shares (189.61 lakh shares approximately), which at the upper price band of ₹385 per share will translate into a total IPO issue size of ₹730 crore.

The issue opens for subscription on 20th September 2023 and closes for subscription on 22nd September 2023 (both days inclusive). The basis of allotment will be finalized on 27th September 2023 and the refunds will be initiated on 29th September 2023. In addition, the demat credits are expected to happen on 03rd October 2023 and the stock will list on 04th October 2023 on the NSE and the BSE.

Read about the IPO of SignatureGlobal India IPO

Understanding SignatureGlobal India IPO GMP

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 SignatureGlobal (India) Ltd, we only 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.

SignatureGlobal India IPO GMP

Here is a quick GMP summary for SignatureGlobal India IPO for which the data is available:

In the above case, the GMP trend shows that the grey market premium has opened at around ₹35, and now its up by ₹50. However, it must be remembered that initially the stock was trading in the grey market without the price band for the IPO being announced. The price band was just announced a couple of days ago and hence the price discovery may still have to happen. However, the GMP level is still indicative of moderate to strong traction for the IPO grey market price. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 20th September 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, SignatureGlobal (India) Ltd has shown moderate to strong traction in the grey market.

If you consider the upper end of the price band of SignatureGlobal (India) IPO at ₹385 as the indicative price, then the likely listing price is being signalled at around ₹420 per share as of the GMP indicator on 16th September 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 ₹35 on a likely upper band pricing of ₹385 indicates a listing premium of a moderate to healthy 9.09% for SignatureGlobal (India) Ltd over the listing price. That pre-supposes a listing price of approximately ₹420 per share, when SignatureGlobal (India) Ltd lists on 04th October 2023. Of course, these are approximations, so you must keep a margin of safety. However, from here on, a lot will depend on the GMP sustaining over the next few days after the issue opens, as well as the subscription flow into the company IPO.

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.

Brief on SignatureGlobal (India) Ltd business model

SignatureGlobal (India) Ltd is a well-established brand with a strong presence in Delhi-NCR region, and is known for innovative construction technologies, amenities & affordable prices. SignatureGlobal (India) Ltd commenced operations in 2014 with the launch of Solera project in Gurugram, Haryana. Since then, the company has already sold 27,965 residential and commercial units in Delhi NCR region. Its focus is predominantly on the affordable housing and middle-income housing segment. It provides value homes with attractive designs and amenities via community facilities. SignatureGlobal (India) Ltd has adopted an integrated real estate development model, handling the project from concept to completion. Its control over multiple process pegs, including centralized raw material procurement system, has resulted in cost efficiencies.

Most of its properties developed are also environmentally responsible projects. For example, its projects enhance green cover through sustainable practices like common area lighting with solar panels, LED lights, high-performance glass with light transmission that ensure better cooling and energy savings. SignatureGlobal (India) Ltd has broadly replicated its business model across the micro-markets in Delhi-NCR, with focus on Gurugram. In order to ensure rapid growth and scalability, the company relies on standardized design, technical specifications, and layout plans. A focus on the mid-market means that the company has maintained its business growth even amidst tough market conditions.

The company will use the fresh funds for repayment / prepayment of certain loans, infusion of funds into subsidiaries, purchase of land parcels, inorganic acquisitions and for general corporate expenses. The issue will be lead managed by ICICI Securities, Axis Capital, and Kotak Mahindra Capital. Link Intime India Private Ltd will be the registrar to the issue.