Grey Market Premium - Tega Industries IPO

5paisa Research Team 5paisa Research Team 30th November 2021 - 02:48 pm

The Rs.619.23 crore IPO of Tega Industries consists entirely of an offer for sale at Rs.619.23 crore. The issue has been priced in the band of Rs.443 to Rs.453 per share and the price will be discovered post the book building.

The issue opens for subscription on 01-Dec and closes for subscription on 03-Dec. The stock is scheduled to list on 13th December. The GMP trading normally starts about 4-5 days prior to IPO opening and continues till the 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 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.

Here is a quick GMP summary for Tega Industries IPO over the last 5 days.

27-Nov	28-Nov	29-Nov	29-Nov
Rs.250	Rs.300	Rs.300	Rs.310

In the above case, the GMP trend has gradually expanded from Rs.250 per share to Rs.310 per share over the last 4 days. Of course, we have to await for the actual subscription numbers to flow in.

But, clearly this shows that the GMP continues to favour smaller sized IPOs over larger sized IPOs.

The consistent rise in the GMP from Rs.250 to Rs.310 levels over last 4 days shows that the GMP continues to favour smaller sized IPOs over mega IPOs, especially where the business model is robust.

Normally, when the overall markets become risky then FPIs may think twice about buying into Indian IPOs due to their risk-off tendencies.

If you consider the upper end of the price band of Rs.453 as the indicative IPO price, then the likely listing price has risen from Rs.703 to Rs.763, implying strong returns on listing.

This is most likely to impact sentiments of investors planning to opt for IPO funding. In the above case, the current GMP of Rs.310, promises returns of 68.43% in the Tega 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. However, investors must note that this is just an informal indication and has no official sanction.

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