An Offer For Sale (OFS) is made by the promoters and initial shareholders of the company. It should be noted here that the fresh issuance component infuses fresh funds into the company, but it is also EPS-dilutive and equity dilutive. On the other hand, OFS is just a transfer of shares, so there is no fresh infusion of funds, but it does not dilute the equity. The cost of this issue is Rs. 234 to Rs. 247 per share and the IPO allotment price will be discovered after the completion of book building of shares during the IPO process.
The issue opens for subscription on December 20, 2022, and closes for subscription on December 22, 2022 (both days inclusive). The basis of allotment will be finalized on 27th December 2022 and the refund will start on 28th December 2022. Further, the demat credit is expected on December 29, 2022, and the stock is scheduled to list on NSE and BSE on December 30, 2022. Gray Market Price (GMP) trading usually starts around 4-5 days before the opening of the IPO and continues till the date of listing. In the case of Elin Electronics Limited, we already have Elin Electronics IPO GMP data for the last 5 days, which should give a fair picture of the likely listing performance.
Two Factors Of GMP
There are 2 factors affecting GMP. Firstly, market conditions have a strong impact on GMP, including Nifty and Sensex levels as well as general IPO market and macro conditions. Secondly, the subscription limit for IPOs in the retail and QIB segments also has a profound impact on GMP as it signals investor interest in the stock. Typically, a strong QIB subscription is a trigger for a spike in GMP.
There is a small point to remember here. GMP is not an official price point, just a popular unofficial price point. However, in most cases, it is considered a good informal estimate of the demand and supply of IPOs. Hence it gives a broad idea of how the listing is likely to happen and the post-listing performance of the stock.
What Is GMP
In the above case, GMP trends suggest that the gray market premium is around Rs. 22, but in the last 4 days Rs. has risen well past the 40 mark. Of course, we will have to wait for the actual subscription numbers to flow in when the issue opens for subscription on December 20, 2002, as this will have a very significant impact on GMP. In the past, over-subscribed stocks in IPOs have shown very strong positive shifts in gray market prices. For starters, Elin Electronics Limited has shown good traction in the gray market.
If you consider the high end of the price band of Elin Electronics Limited at ₹ 247 as the indicative price, then the possible listing price on 20 Dec 2022 is being indicated at ₹ 293 per share as per GMP Indicator. One data point to track would be subscription updates on the stock as the GMP course charts from here. As mentioned, institutional QIB subscriptions are a major driver of GMP pricing.
Rupee. 247 at the upper band cost of Rs. The GMP of 46 indicates a healthy listing premium of 18.62% for Elin Electronics Limited over the listing price. When Elin Electronics Limited lists on 30 December 2022, the price per share will be around Rs. 293 will be the listing price. Of course, these are estimates, so you should have a margin of safety. However, this will depend on maintaining GMP in the next few days after opening the issue.
GMP (grey market price) is an important indicator, albeit informal, of a likely listing price. One cannot take this value at face value, but GMP is very dynamic and changes with the flow of news and events. Investors should note here that this is only an informal indication and there is no official approval. The best part with GMP is that it can closely follow the trend as it gives the best indication of the listing status. Focus on the time series trend more than the numbers.
What Is An Elin Electronics Limited?
Elin Electronics Limited is a 53-year-old company and is a leading player in Electronics Manufacturing Services (EMS) business. IT manufacturer on a work contract basis on behalf of leading brands in the areas of lighting, fans, and kitchen appliances. Elin Electronics is also India’s largest Fractional Horsepower Motors manufacturer. Elin currently caters to Original Equipment Manufacturers (OEMs) and Original Design Manufacturers (ODMs) as part of its core business model. It has 3 manufacturing units at Ghaziabad in Uttar Pradesh, Baddi in Himachal Pradesh, and Verna in Goa. It also has an in-house research and development center for providing value-added research on concept sketching, design refinement, optional features, and testing.
Elin Electronics is an existing profit-making company and will use the fresh issuance component for debt repayment and CAPEX. The issue is being managed by Axis Capital and JM Financial. Kiffin Technology will be the registrar for this issue.