Metro Brands IPO - Grey Market Premium
5paisa Research Team
Last Updated: 16th December 2022 - 02:31 pm
The Rs.1,367.51 crore IPO of Metro Brands Ltd consists of a fresh issue of Rs.295 crore and an offer for sale of Rs.1,072.51 crore. The issue has been priced in the band of Rs.485 to Rs.500 per share and the IPO allotment price will be discovered post the book building.
The issue opens for subscription on 10-Dec and closes for subscription on 14-Dec. The stock is scheduled to list on 22nd December. The GMP trading normally starts about 4-5 days prior to IPO opening and continues till the listing date. However, in the case of Metro Brands IPO, due to the delay in the announcement of the price band, there has been only two days of GMP available.
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 insights about which direction the wind is blowing. Here is a quick GMP summary for Metro Brands Ltd over the last 2 days for which GMP is available.
|
08-Dec |
09-Dec |
|
Rs.70 |
Rs.70 |
In the above case, the GMP trend shows that the grey market premium has been consistent at Rs.70 per share over the last 2 days. Of course, we have to await for the actual subscription numbers to flow in. But, clearly this shows reasonable interest in the grey market ahead of the IPO.
If you consider the upper end of the price band as the indicative price, then the likely listing price is being signalled at around Rs.570 per share. One data point to track will be the listing of Star Health IPO on 10-December, which got just 79% subscribed and had to reduce the size of the IPO by Rs.840 crore.
That could hold the key to IPO market sentiments and the IPO looks set to list at a discount as per grey market signals. More so, because like Star Health, Metro Brands is also backed by ace investor, Rakesh Jhunjhunwala.
Check - Big Bull Rakesh Jhunjhunwala's Portfolio 2021
The GMP of Rs.70 on a likely upper band pricing of Rs.500 indicates a listing premium of a reasonable 14% over the listing price. That presupposes a listing price of approximately Rs.570 per share, when Metro Brands lists on 24th December.
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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Sachin Gupta
5paisa Research Team
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