Anand Rathi Wealth IPO - Grey Market Premium

5paisa Research Team 5paisa Research Team 1st December 2021 - 10:31 pm

The Rs.660 crore IPO of Anand Rathi Wealth consists entirely of an offer for sale worth Rs.660 crore. The issue has been priced in the band of Rs.530 to Rs.550 per share and the actual IPO price will be discovered through the process of book building.

The issue opens for subscription on 02-Dec and closes for subscription on 06-Dec, due to two stock market holidays in between. The stock is scheduled to finalize the basis of allotment on 09-December and list on the stock exchanges on 14th December. The GMP trading normally starts about 4-5 days prior to IPO opening and continues till listing date.

However, there are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP. Secondly, the extent of subscription also has a deep impact on the GMP as it is indicative of investor interest in the stock.

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 proved to be a good informal gauge of demand and supply for the Anand Rathi IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance would be.

While the GMP is just an informal approximation, it has been generally seen to be a good mirror of the real story. More than the actual price, it is the GMP trend over time that really gives the insights about the stock being upgraded or downgraded over a period of time and which direction the wind is blowing.

Quick GMP summary for Anand Rathi Wealth over the last 4 days.

28-Nov	29-Nov	30-Nov	01-Dec
Rs.100	Rs.100	Rs.100	Rs.125

In the above case, the GMP trend has gradually expanded from Rs.100 per share to Rs.125 per share just ahead of the IPO opening. Of course, we have to await for the actual subscription numbers to flow in and that will further tweak the IPO GMP.

But, clearly GMP continues to favour smaller sized IPOs over larger sized IPOs. But this is more so for profit making companies where the business model is robust.

If you consider the upper end of the price band of Rs.550 as the indicative IPO price, then the likely listing price has risen from Rs.650 to Rs.675, implying decent returns on listing.

This is most likely to influence sentiments of investors planning to opt for IPO funding. In the above case, the current GMP of Rs.125, promises returns of 22.73% in the Anand Rathi Wealth IPO on listing.

GMP is an important informal indicator of likely listing price, although it tends to be quite dynamic and changes direction with the flow of news and the subscription flows. However, investors must note that this is just an informal indication and has no official sanction.

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Anand Rathi Wealth IPO - Information Note