Srivari Spices and Foods IPO GMP (Grey Market Premium)

In the above case, the GMP trend shows that the grey market premium has opened at around ₹10, but now its up by ₹27. Of course, we have to await the actual subscription numbers to flow in when the issue opens for subscription on 07th 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, Srivari Spices and Foods Ltd has shown good traction in the grey market. However, it must be remembered that the GMP trading started even before the price band was announced so some adjustment is on the cards.

If you consider the upper end of band price of the IPO of Srivari Spices and Foods Ltd at ₹42, then the likely listing price is being signalled at around ₹51 per share as per the GMP indicator on 02nd 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 ₹9 on the upper end of the book built IPO price of ₹42 indicates a listing premium of a healthy 21.43% for Srivari Spices and Foods Ltd over the listing price. That pre-supposes a listing price of approximately ₹51 per share, when Srivari Spices and Foods Ltd lists on 18th 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 on Srivari Spices and Foods Ltd

Srivari Spices and Foods Ltd, is an SME IPO on the NSE which is opening for subscription on 07th August 2023. Srivari Spices and Foods Ltd, was incorporated in the year 2019 to manufacture spices and flour (chakki atta). Its principal product categories include spices, masala and atta. While its spices get delivered to over 3,000 outlets, its atta gets delivered to more than 15,000 outlets. Its whole wheat and Sharbati atta are quote popular in the states of Andhra Pradesh and Telangana. Its predominantly uses organic methods with limited use of artificial preservatives and chemicals to retain the original flavour. It has a direct to customer (D2C) sales model as well as a business to business (B2B) marketing model to cater to institutional and corporate customers.

The company has two production facilities at Ranga Reddy district, adjoining Hyderabad. The raw materials are sourced directly from the farmers and then processed at their manufacturing plants located near Hyderabad. In 2020, the company expanded its product portfolio to include sambar masala, chicken masala, garam masala and mutton masala. Sourcing the raw materials directly from the farmers gives the company a cost advantage. The company is also looking to expand its products into countries with a vast expatriate population, which would be a logical market extension to the domestic market. In terms of revenue contribution, spices contribute 79% of revenues and wheat flour 21%.

The fresh issue funds will be used for working capital funding and for general corporate purposes. The issue will be lead managed by GYR Capital Advisors Private Ltd while Bigshare Services Ltd will be the registrars to the SME IPO of Srivari Spices and Foods Ltd.