Uniparts India IPO GMP (Grey Market Premium)

Uniparts India IPO, worth Rs. 835.61 crore comprises entirely of an offer for sale of the said amount. There is no fresh issue component in this IPO. The offer for sale (OFS) component is by the promoters and early shareholders of the company. Here it must be noted that while the fresh issue component infuses fresh funds into the company, it also is EPS dilutive and equity dilutive. On the other hand, the OFS is just a transfer of shares so there is no fresh infusion of funds, but it also does not dilute the equity. The issue has been priced in the band of Rs. 548 to Rs. 577 per share and the IPO allotment price will be discovered post the book building of shares being completed during the IPO process.

Uniparts India IPO Review - APPLY or NOT?

The issue opens for subscription on 30th November 2022 and closes for subscription on 02nd December 2022 (both days inclusive). The basis of allotment will be finalized on 07th December 2022 and the refunds will be initiated on 08th December 2022. In addition, the demat credits are expected to happen on 09th December 2022 and the stock is scheduled to list on 12th December 2022 on the NSE and the BSE. 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 Uniparts India Ltd, we already have GMP data for the last 4 days, which should give a reasonable picture of the likely listing performance.

There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, which includes the levels of the Nifty and Sensex as well as the general IPO market and macro conditions. Secondly, the extent of subscription for the IPO across the retail and the QIB segments also has a deep impact on the GMP as it is indicative of investor interest in the stock. Generally, strong QIB subscription is a trigger for a spike in GMP.

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 Uniparts India Ltd for the 4 days, data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around Rs. 140, but has since oscillated between the levels of Rs. 130 and Rs. 140 in the last 4 days. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 30th November 2002, 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, Uniparts India Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of Uniparts India Ltd at Rs. 577 as the indicative price, then the likely listing price is being signalled at around Rs.714 per share as of the GMP indicator on 28th November. One data point to track will be the subscription update on the stock as that would chart the GMP course from here. As mentioned, the institutional QIB subscription is a key trigger for the GMP pricing.

The Uniparts India IPO GMP of Rs. 137 on a likely upper band pricing of Rs. 577 indicates a listing premium of a healthy 23.74% for Uniparts India Ltd over the listing price. That pre-supposes a listing price of approximately Rs. 714 per share, when Uniparts India Ltd lists on 12th December 2022. 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.

GMP (grey market price) is an important indicator, albeit informal, of likely listing price. One cannot take this price at face value However, the GMP tends to be quite dynamic and changes direction with the flow of news and events. Investors must note here that this is just an informal indication and has no official acceptance. 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.

Uniparts India Ltd is into manufacturing of engineered systems and solutions. Uniparts is one of the leading suppliers of systems and components for the off-highway market in agriculture and construction, forestry and mining (CFM) sector and has an established presence across 25 nations. Essentially, Uniparts offers the complete value chain of products and solutions from concept-to-supply for precision products for off-highway vehicles (OHVs).

Uniparts has a total of 5 manufacturing plants in India of which 2 are located at Ludhiana in Punjab, 2 in Noida and 1 in the port town of Visakhapatnam in Andhra Pradesh. In addition, Uniparts also has a warehousing and distribution facility at Augusta Richmond in Georgia (US). The issue is being lead managed by Axis Capital, DAM Capital (formerly IDFC Securities) and JM Financial. Link Intime will be the registrars to the issue.