Srivari Spices and Foods IPO GMP (Grey Market Premium)
Srivari Spices and Foods IPO worth ₹9.00 crore comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO from promoters and early shareholders. The price band has been fixed in the range of ₹40 to ₹42 per share and the final price will be discovered in this band via book building. The fresh issue portion of the IPO entails the issue of 21.42 lakh shares which at the upper end of the price band at ₹42 is worth ₹9.00 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹9.00 crore is also the size of the overall IPO.
How to apply for the Srivari Spices and Foods IPO
Srivari Spices and Foods IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 3,000 share each, entailing a minimum investment of ₹126,000 in the IPO at the upper end of the price band of ₹42 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 6,000 shares entailing an investment of ₹252,000. The table below captures the lot sizes permissible.
As per the terms of the offer, 50% of the net offer is reserved for the qualified institutional buyers (QIBs), 15% of the offer is reserved for the HNI / NII investors and the balance 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. It is captured in the table below.
|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|
Like in every SME IPO, Srivari Spices and Foods IPO also has a market maker. The Market maker typically provides buy and sell quotes post listing to ensure liquidity and low basis risk in the stock. In this case, the makers will be Nikunj Stock Brokers Ltd, who will act as the market maker for the Srivari Spices and Foods IPO SME. The company has set aside 108,000 shares for the market maker.
The issue opens for subscription on 07th August 2023 and closes for subscription on 09th August 2023 (both days inclusive). The basis of allotment will be finalized on 14th August 2023 and the refunds will be initiated on 16th August 2023. In addition, the demat credits are expected to happen on 17th August 2023 and the stock is scheduled to also list on 18th 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.
About the Srivari Spices and Foods IPO GMP pricing
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 Srivari Spices and Foods Ltd, we already have GMP data for the last 3 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.
How the Srivari Spices and Foods IPO GMP panned out in last few days
Srivari Spices and Foods IPO 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 Srivari Spices and Foods IPO for which the data is available.
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.
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