Sungarner Energies IPO GMP (Grey Market Premium)

Sungarner Energies IPO worth ₹5.31 crore, worth comprises entirely of a fresh issue with no offer for sale (OFS) component in the IPO from promoters and early shareholders. It is a fixed price issue and the IPO price has been fixed at ₹83 per share. The fresh issue portion of the IPO entails the issue of 6,40,000 shares (6.40 lakh shares) which at the IPO fixed price of  ₹83 is worth ₹5.31 crore. Since there is no OFS component in the IPO, the fresh issue size of ₹5.31 crore is also the size of the overall IPO.

How to apply for the Sungarner Energies IPO

The stock of Sungarner Energies IPO has a face value of ₹10 and bidders can only bid in minimum lot size of 1,600 share each, entailing a minimum investment of ₹132,800 in the IPO at the fixed IPO price of ₹83 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 3,200 shares entailing an investment of ₹265,600. The table below captures the lot sizes permissible.

As per the terms of the offer, 9% of the net offer is reserved for the market makers to the issue. Of the balance, 45.5% of the offer is reserved for the HNI / NII investors and the balance 45.5% is reserved for the retail investors. It is a fixed price issue with the price of the IPO already defined at ₹83 per share. The allocation is captured in the table below.

Like in every SME IPO, Sungarner Energies 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 market makers will be Nikunj Stock Brokers Ltd, who will act as the market maker for the SME IPO of Sungarner Energies Ltd. The company has set aside 57,600 shares for the market maker.

The issue opens for subscription on 21st August 2023 and closes for subscription on 23rd August 2023 (both days inclusive). The basis of allotment will be finalized on 28th August 2023 and the refunds will be initiated on 29th August 2023. In addition, the demat credits are expected to happen on 30th August 2023 and the stock is scheduled to also list on 31st 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 Sungarner Energies 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 Sungarner Energies 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.

How has the Sungarner Energies IPO GMP panned out in last few days

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 Sungarner Energies IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹17, but up by ₹45. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 21st 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, Sungarner Energies Ltd has shown good traction in the grey market.

If you consider the fixed IPO price of the new issue of Sungarner Energies Ltd at ₹83, then the likely listing price is being signalled at around ₹100 per share as per the GMP indicator on 22nd 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 ₹17 on the fixed price of the IPO at ₹83 per share indicates a listing premium of a healthy 20.48% for Sungarner Energies Ltd over the listing price. That pre-supposes a listing price of approximately ₹100 per share, when Sungarner Energies Ltd lists on 31st 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.

Read about Sungarner Energies IPO

Brief on Sungarner Energies Ltd

Sungarner Energies Ltd was incorporated in 2015. The company is engaged in the business of manufacturing Solar Inverters, Online UPS Systems, EV Chargers, and Lead Acid Batteries, which are some of the key inputs that go into the generation of solar energy and are also key inputs of solar and renewable energy related equipment. The company started off as a design engineering and solar EPC company and later diversified into higher end products. Today, the company makes power electronics and energy storage products also. Sungarner Energies Ltd also producers lead acid batteries of capacities ranging from 12 Volts 40 ampere-hours to 12 volts 300 ampere-hours.

Sungarner Energies Ltd has also obtained a WMI (world manufacturer identifier) code for the manufacture of EV Vehicles. This product is currently only in the prototype stage and there is still time for full-scale manufacturing of EV Vehicles. The major clients of Sungarner Energies Ltd come from the northern states of Haryana, UP, and Rajasthan as well as the eastern states of Bihar and Assam. The company has also established a total of 6 service Centres in India, across most of its key markets. At present, the company is planning to expand its footprint through additional 500 Franchisees across major Districts of India by the end of 2025. Sungarner Energies Ltd has also started exports in last 2 years and currently exports its products to countries like Nigeria, Lebanon, Nepal, Dubai, and Bhutan

The fresh issue portion will be used to fund working capital needs and for general corporate purposes. The issue will be lead managed by Fast Track Finsec Private Ltd while Skyline Financial Services Ltd will be the registrars to the SME IPO of Sungarner Energies Ltd.