Transteel Seating Technologies IPO GMP (Grey Market Premium

Transteel Seating Technologies IPO opens for subscription on 30th October 2023 and closes for subscription on 01st November 2023. The stock of the company has a face value of ₹10 per share and this is a book built issue with the IPO price band fixed between ₹67 and ₹70 per share. The IPO of Transteel Seating Technologies Ltd has a fresh issue component and an offer for sale (OFS) component. The fresh portion of the IPO entails the issue of 67,84,000 shares (67.84 lakh shares), which at the upper band IPO price of ₹70 per share aggregates to a fresh fund raising of ₹47.49 crore. The offer for sale (OFS) portion entails the sale of 3,56,000 shares (3.56 lakh shares) by promoter shareholder (Nasreen Shiraz), which at the upper band IPO price of ₹70 per share aggregates to OFS size of ₹2.49 crore. As a result, the total size of the IPO of Transteel Seating Technologies Ltd will entail the issue and sale of 71,40,000 shares (71.40 lakh shares), which at the upper band IPO price of ₹70 per share aggregates to total IPO size of ₹49.98 crore.

Like any SME IPO, this issue also has a market maker allocation of 7,14,000 shares, which is 10% of the total issue size. The market maker for the IPO is Gretex Share Broking Ltd and they will provide two-way quotes to ensure liquidity with low basis spread risk for the investors. Post the IPO of Transteel Seating Technologies Ltd, the promoter stake in the company will dilute from the current 83.75% to 53.83%. The company will use the fresh fund infusion to purchase manufacturing equipment, repayment / prepayment of loans, and for working capital needs. Gretex Corporate Services Ltd and Pantomath Capital Advisors Private Ltd will be the lead managers to the issue and Bigshare Services Private Ltd will be the registrar to the IPO.

About the GMP pricing for Transteel Seating Technologies IPO

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 Transteel Seating Technologies 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 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 Transteel Seating Technologies IPO for which the data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹15, but has since stayed at ₹12 for which GMP data is available. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 30th October 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, Transteel Seating Technologies IPO has shown good traction in the grey market.

If you consider the upper band price of the IPO of Transteel Seating Technologies Ltd at ₹70 per share, then the likely listing price is being signalled at around ₹85 per share as per the GMP indicator on 25th October 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 ₹15 on the upper band IPO price of ₹70 indicates a listing premium of a healthy 21.43% for Transteel Seating Technologies Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹85 per share, when Transteel Seating Technologies IPO lists on 09th November 2023. Of course, these are purely 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 the absolute numbers.

How to apply for the Transteel Seating Technologies IPO

The minimum lot size for the IPO investment will be 2,000 shares. Thus, retail investors can invest a minimum of ₹140,000 (2,000 x ₹70 per share) in the IPO. That is also the maximum that the retail investors can invest in the IPO. HNI / NII investors can invest a minimum of 2 lots comprising of 4,000 shares and having a minimum lot value of ₹280,000. There is no upper limit on what the QIBs as well as what the HNI / NII investors can apply for. The table below captures the break-up of lot sizes for different categories.

The company has allocated 10.00% of the issue size for the market makers to the issue, Gretex Share Broking Ltd. The net offer (net of market maker allocation) will be divided between the QIBs, the retail investors and the HNI / NII investors. The breakdown of the overall IPO of Transteel Seating Technologies Ltd in terms of the allocation to various categories are captured in the table below.

The issue opens for subscription on 30th October 2023 and closes for subscription on 01st November 2023 (both days inclusive). The basis of allotment will be finalized on 06th November 2023 and the refunds will be initiated on 07th November 2023. In addition, the demat credits are expected to happen on 08th November 2023 and the stock is scheduled to also list on 09th November 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.