Valiant Laboratories IPO GMP (Grey market premium)

Valiant Laboratories Ltd has a face value of ₹10 per share while the price band for the book building IPO has been set in the band of ₹133 to ₹140. The IPO of Valiant Laboratories Ltd is entirely a fresh issue with no offer for sale (OFS). The fresh issue portion comprises the issue of 1,08,90,000 shares (108.90 lakh shares), which at the upper price band of ₹140 per share will translate into fresh issue size of ₹152.46 crore. Since there is no offer for sale (OFS) component in the IPO, the overall IPO size will also comprise of 1,08,90,000 shares (108.90 lakh shares), which at the upper price band of ₹140 per is valued at ₹152.46 crore.

About the GMP pricing for Valiant Laboratories 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 Valiant Laboratories 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 Valiant Laboratories IPO for the 2 days, data is available.

In the above case, the GMP trend shows that the grey market premium has opened at around ₹10, but has since stayed at ₹20. Of course, we have to await for the actual subscription numbers to flow in after the issue opens for subscription on 27th September 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, Valiant Laboratories Ltd has shown good traction in the grey market.

If you consider the upper end of band price of the IPO of Valiant Laboratories Ltd at ₹140, then the likely listing price is being signalled at around ₹150 per share as per the GMP indicator on 28th September 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 ₹10 on the upper end of the book built IPO price of ₹140 indicates a listing premium of a moderate to healthy 7.14% for Valiant Laboratories Ltd over the IPO issue price. That pre-supposes a listing price of approximately ₹150 per share, when Valiant Laboratories Ltd lists on 09th October 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 instead of just the GMP absolute numbers.

How to apply for the Valiant Laboratories IPO

Let us first look at lot sizes. Lot size is the minimum number of shares that the investor has to put in as part of the IPO application. The lot size only applies for the IPO and once it is listed then it can be even traded in multiples of 1 shares since it is a mainboard issue. Investors in the IPO can only invest in minimum lot size and in multiples thereof. In the case of Valiant Laboratories Ltd, the minimum lot size is 105 shares with upper band indicative value of ₹14,700 to begin with. The table below captures the minimum and maximum lots sizes applicable for different categories of investors in the IPO of Valiant Laboratories Ltd.

As per the terms of the offer; 50% of total issue size is reserved for qualified institutional buyers (QIBs), 15% of offer size 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.

The issue opens for subscription on 27th September 2023 and closes for subscription on 03rd October 2023 (both days inclusive). The basis of allotment will be finalized on 05th October 2023 and the refunds will be initiated on 06th October 2023. In addition, the demat credits are expected to happen on 06th October 2023 and the stock is scheduled to also list on 09th October 2023 on the NSE and the BSE.