What is grey market signalling for Sona, Shyam, Dodla, KIMS IPOs?

NEW DELHI: After a drought of two months, it’s raining IPOs on Dalal Street again, with four companies – Sona Comstar, Shyam Metalics, Dodla Dairy and KIMS Hospitals – hitting the market with their primary issues.

The grey market, where investors seek the first cue on public issues, is sufficiently enthused too! The unofficial market for trading in unlisted shares is signaling good response for most of these issues. Two of the issues are trading at solid premia, while the remaining two have been lacklustre so far as traders find the IPO pricing too aggressive and growth visibility low.

“The market is at its lifetime highs. The grey market is anticipating robust response for these IPOs,” said Abhay Doshi, Founder, UnlistedArera.com, a player in the grey market. “Companies with small issue sizes and attractive issue prices are creating more buzz.”

The four IPO coming from different sectors aim to raise Rs 9,123 crore. Calendar 2021 has been a roller-coaster year for IPOs so far. Some 19 issues (including those of Brookfield REIT and PowerGrid InvIT) have mopped up over Rs 29,000 crore from the primary market thus far.

“The IPO mart is getting ready for six IPOs in a couple of months. They should create good opportunity for retail investors to make money from listing gains,” said Yash Gupta, Equity Research Associate, Angel Broking.

Here are the complete details of the IPOs hitting the market this week and what the grey market is signalling.

• Shyam Metalics and Energy: The Rs 909 crore IPO of the integrated metal producing company consists of fresh issuance of equity shares worth up to Rs 657 crore and an OFS to the tune of Rs 252 crore by existing shareholders.

The price band has been fixed at Rs 303-306 per share for the IPO, which is open for public subscription during June 14-16. Investors can bid for a minimum of 45 shares and in multiples of 45 thereafter.

The grey market premium for Shyam Metalics and Energy has been rising constantly, having risen to Rs 150-160 from Rs 100-110 over the past week, which suggests more than 50 per cent upside on the issue price.

“The metal sector has been on a roll recently on the back of the commodity super cycle. Also, the company is planning robust expansion in the near future, which is a big thumbs up. The issue is reasonably priced, and that is adding more to its sheen,” said Doshi.

• Sona Comstar: The auto component maker’s Rs 5,550 crore IPO comprises fresh issue of shares amounting to Rs 300 crore and an offer for sale (OFS) aggregating up to Rs 5,250 crore by shareholder Singapore VII Topco III, an affiliate of the Blackstone Group Inc.

The issue is open from June 14 to 16. The company has fixed the price band at Rs 285-291 a share. Investors can subscribe to the IPO by bidding for a minimum of 51 shares, and in multiples thereof.

Sona Comstar’s unlisted shares have been trading at a tepid premium of Rs 12-15, less than 10 per cent of the issue price. Dealers are wary of its aggressive pricing.

Narottam Dharawat of Dharawat Securities said the product mix and company profile are pretty interesting. “At the current valuations, the issue appears to be fully priced, and thus, the premium is subdued in the grey market,” he said.

• Krishna Institute of Medical Sciences (KIMS): The IPO of the General Atlantic-backed KIMS Hospitals comprises fresh issue of shares aggregating up to Rs 200 crore and an OFS of up to 2,35,60,538 equity shares from promoters and existing shareholders. The offer includes Rs 20 crore worth of shares set aside for the company’s employees, who will avail a discount of up to Rs 40 per share on the issue price.

The company has set the IPO price band at Rs 815-825 for the three-day share sale, which will conclude on June 18. Investors can bid for a minimum of 18 shares and in multiples of 18 thereafter.

KIMS Hospital is commanding a grey market premium of Rs 150-160, signalling a 18-20 per cent upside over the issue price. Dharawat said the issue can turn out to be a dark horse.

“The company’s business model is attractive, but high pricing is a concern here as well. There is not much buzz about the issue. However, we expect it to be a positive surprise for investors,” he said.

• Dodla Dairy: The dairy firm aims to mop up Rs 520 crore from the IPO. The issue comprises fresh issuance of shares worth up to Rs 50 crore besides an OFS of up to 1,09,85,444 equity shares by TPG Dodla Dairy Holdings, Dodla Sunil Reddy, Dodla Deepa Reddy and Dodla Family Trust.

The South India-based dairy company has fixed the IPO price band at Rs 421-428 a share. The issue will be open for public subscription from June 16 through 18. The lot size for the issue has been fixed for 35 shares.

Grey market premium for Dodla dairy has been increasing as the issue draws closer, having doubled in the last two days from Rs 75-80 to Rs 160-165.

“Dairy stocks have not rewarded investors handsomely in the past, but Dodla is constantly improving margins. With decent pricing and its focus on value-added products, the IPO is likely to attract investors,” said Doshi of UnlistedArena.