Systango Technologies IPO GMP (Grey Market Premium)

Systango Technologies IPO worth Rs. 34.82 crore, comprises entirely of a fresh issue of the IPO amount. The total of Systango Technologies SME IPO  entails the issue of 38.688 lakh shares at a price band of Rs(85 to 90) per share. The IPO size at the upper band of Rs. 90 aggregates to Rs. 34.82 crore. The stock has a face value of Rs. 10 and retail bidders can only bid in minimum lot size of 1,600 share each, entailing a minimum investment of Rs. 144,000 in the IPO. That is also the maximum that a retail investor can apply for in the IPO.

In the case of HNI / NII investors, they can bid for a minimum 2 lots of 3,200 shares entailing a minimum investment of Rs. 288,000. As per the terms of the offer, 50% of the offer is reserved for the qualified institutional buyers (QIBs), 35% for the retail investors and 15% for the HNI / NII category of investors. It is a fixed price issue and Hem Finlease Private Limited will act as the market maker for the SME IPO of Systango Technologies Ltd and the market maker portion will be 196,800 shares.

The issue opens for subscription on 02nd March 2023 and closes for subscription on 06th March 2023 (both days inclusive). The basis of allotment will be finalized on 10th March 2023 and the refunds will be initiated on 13th March 2023. In addition, the demat credits are expected to happen on 14th March 2023 and the stock is scheduled to list on 15th March 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. The grey market price (GMP) trading normally starts about 3-4 days prior to IPO opening and continues till the listing date; but in this case the GMP trading has just started since Monday 27th February 2023. In the case of Systango Technologies Ltd, we already have GMP data for the last 2 days, which should give a reasonable picture of the likely listing to begin with.

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, albeit not an official one. 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 summary for Systango Technologies IPO GMP for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 33 and and is now trading around Rs. 20. Of course, we have to wait 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, Systango Technologies Ltd has shown good traction in the grey market.

If you consider the upper band price of the IPO of Systango Technologies Ltd at Rs. 90, then the likely listing price is being signalled at around Rs. 123 per share as per the GMP indicator on 28th February 2023. This is dynamic and keeps changing. One data point to track will be the real time subscription update on the stock as that would chart the GMP course from here.

The GMP of Rs. 33 on a upper IPO price band level of Rs. 90 indicates a listing premium of a healthy 36.7% for Systango Technologies Ltd over the listing price. That pre-supposes a listing price of approximately Rs. 123 per share, when Systango Technologies Ltd lists on 15th March 2023. Of course, these are approximations, so you must keep a margin of safety. However, that would depend on the GMP sustaining over the next few days after the issue opens. 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. Remember, that the GMP can also be negative, which is illustrative of a discount listing.

Systango Technologies Limited is an IT services company operating for 2 decades. It offers software solutions to enable companies to design, implement and manage their own customized digital platforms. Systango caters to hospitality, PropTech, Financial services, Fintech, fantasy sports and other sectors. Systango offers solutions for iOS and Android applications. In addition, it offers Web3 development, DeFi (Decentralized finance), Data Engineering, blockchain implementation, Cloud computing and digital Marketing. This flexibility allows them to easily adapt to the complex needs of the new-age digital world.

Systango Technologies Ltd will use the funds for strategic investment and acquisitions, investing in subsidiaries and meet working capital costs. Promoters currently hold 97.73% of the equity, and this stake will be diluted post the IPO. The issue is being lead managed by Hem Securities Limited, while Bigshare Services Private Limited will be registrar to the issue.