Tridhya Tech IPO GMP (Grey Market Premium)
The ₹26.41 crore IPO of Tridhya Tech Ltd comprises entirely of a fresh issue with no offer for sale (OFS) component by promoters and early shareholders. The company has a face value of ₹10 per share and the issue price for the fresh issue portion, which is a book built issue, has a price band of Rs35 to Rs42. The company plans to issue a total of 62.88 lakh shares which at the upper band of ₹42 per share aggregates to a fresh issue size of ₹26.41 crore. Since there is no offer for sale in this IPO, so the entire SME IPO of Tridhya Tech Ltd is equivalent to the size of the fresh issue of shares only.
The stock of Tridhya Tech 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 ₹126,600 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. Econo Broking Ltd will act as the market maker for the SME IPO of Tridhya Tech Ltd. The company has set aside 315,000 shares for the market maker.
The issue opens for subscription on 30th June 2023 and closes for subscription on 05th July 2023 (both days inclusive). The basis of allotment will be finalized on 10th July 2023 and the refunds will be initiated on 11th July 2023. In addition, the demat credits are expected to happen on 12th July 2023 and the stock is scheduled to list on 13th July 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 4-5 days prior to IPO opening and continues till the listing date. In the case of Tridhya Tech 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.
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 Tridhya Tech IPO for which the data is available.
In the above case, the GMP trend shows that the grey market premium has opened at around ₹4, and has maintained to ₹4. Of course, we have to await 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, Tridhya Tech Ltd has shown good traction in the grey market.
If you consider the upper end of band price of the IPO of Tridhya Tech Ltd at ₹42, then the likely listing price is being signalled at around ₹47 per share as per the GMP indicator on 27th June 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 ₹5 on the upper end of the book built IPO price of ₹42 indicates a listing premium of a healthy 11.9% for Tridhya Tech Ltd over the listing price. That pre-supposes a listing price of approximately ₹47 per share, when Tridhya Tech Ltd lists on 13th July 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.
Here is a quick company background of Tridhya Tech Ltd, an SME IPO on the NSE opening for subscription on 30th June 2023. The company was incorporated in 2018 to develop software products and solutions for clients. Tridhya provides IT consulting services to sectors and verticals like ecommerce, real estate, transport, logistics, insurance etc. It also provides enterprise content management solutions, bespoke web management, development of mobile apps, API development, support, front end design, GUI etc.
Tridhya Tech Ltd handles the complete life cycle of the software solution and takes ownership end to end. This includes product concept, product design, architecture, coding, testing and even deploying in test environment and real live environment. It had recently acquired Concentric IT Services Private Limited, Basic Root Technologies Private Limited, and Vedity Software Private Limited. Tridhya has a strong global presence with clients located in Australia, Canada, France, Germany, Israel, Italy, Japan, Mauritius, the Netherlands, Qatar, Singapore, UK, UAE, the US etc. Additionally, there is also a strong domestic franchise. The issue will be lead managed by Interactive Financial Services Ltd while Link Intime India Private Ltd will be the registrars.
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