Utkarsh Small Finance Bank IPO GMP (Grey Market Premium)

In the above case, the GMP trend shows that the grey market premium has opened at around ₹15, and up by ₹16.10. Of course, we have to await for the actual subscription numbers to flow in when the issue opens for subscription on 12th July 2023, 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, Utkarsh Small Finance Bank Ltd has shown good traction in the grey market.
If you consider the upper end of the price band of Utkarsh Small Finance Bank Ltd at ₹25 as the indicative price, then the likely listing price is being signalled at around ₹39 per share as of the GMP indicator on 10th July 2023. 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 GMP of ₹14 per share on a likely upper band pricing of ₹25 indicates a listing premium of a healthy 56% for Utkarsh Small Finance Bank Ltd over the listing price. That pre-supposes a listing price of approximately ₹39 per share, when Utkarsh Small Finance Bank Ltd lists on 24th July 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.
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.

Utkarsh Small Finance Bank Ltd was incorporated in the year 2016 as an SFB (Small Finance Bank). It has an AUM of ₹5,000 crore and was one of the fastest growing SFBs in India between the fiscal years FY19 and FY22. Utkarsh Small Finance Bank Ltd  broadly caters to the individuals and to businesses to assist them with their financial needs and offer them solutions. The bank offers accounts and deposits, cards, insurance and investments, and loans. The bank offers loans up to Rs50 crores with a maximum tenure of up to 30 years. The SBF offers loans to eligible salaried and self-employed individuals too.

The main bread-and-butter business of Utkarsh Small Finance Bank Ltd will remain its microfinance franchise, where it has built expertise. Some of the asset products offered by Utkarsh Small Finance Bank include microfinance loans (both individual and joint), unsecured retail loans, secured retail loans, short-term wholesale loans, long term wholesale loans, loans for affordable housing as well as loans for the purpose of purchase of commercial vehicles (CV), construction equipment etc. The company also offers gold loans. The issue will be lead managed by ICICI Securities Ltd and Kotak Mahindra Capital Company Ltd. KFIN Technologies Ltd (formerly Karvy Computershare) will be the registrar to the issue.