The GK Energy IPO is in the spotlight on its second day of bidding. As the IPO enters its Day 2 of bidding, its GMP has cooled off to 14% from last wee’s 30% levels. The big question is will this IPO deliver gains at listing and what are the big concerns weighing on investor sentiment.
The Rs 464.26 crore IPO, priced between Rs 145-153, opened on September 19 and will close its subscription window on September 23. Let’s take a look at the key this you need to watch out for before you hit the apply button –
GK Energy IPO Day 2: 5 key risks investors should know
As per the DRHP filing , some of the key risks mention by the company include –
- Heavy reliance on solar pump EPC business
The company noted, “99.56%, 92.40%, 91.07%, 90.55% and 68.54% of our revenue…came from EPC of solar-powered agricultural water pump systems. Any drop in demand could affect our business, financial condition, results, and cash flows.”
- Regional exposure risk
Most operations are concentrated in Maharashtra, Chhattisgarh, Haryana, Uttar Pradesh, and Rajasthan. As the DRHP warns, “Any sustained downturn in the economy of any of these states, especially Maharashtra, could reduce demand and hurt operations.”
- Supplier dependence
GK Energy sources key components from a limited number of vendors. A supplier failure could impact production and project timelines.
- Competitive pressure
The EPC solar pump sector is highly competitive. The company admits that failing to compete effectively “could have an adverse effect on our business, results, financial condition, and cash flows.”
- Reputation and publicity risks
Any negative publicity related to the company or its services could harm branding and investor confidence.
GK Energy IPO Day 2: Grey market buzz
The IPO has been actively traded in the grey market. The current grey market premium (GMP) of GK Energy is Rs 22. As per the latest trend, this indicates that shares could list near Rs 175. This is about 14% above the upper end of the price band.This is significantly lower than the trend seen on Friday when the GMP was surging 30%.
However, it is also important to note that this is not the actual listing price and may fluctuate based on the market sentiment.
GK Energy IPO Day 2: Structure and objective
GK Energy IPO consists of a fresh issue of 2.61 crore shares worth Rs 400 crore and an offer for sale of 42 lakh shares by promoters totaling Rs 64.26 crore.
Furthermore, retail investors need a minimum bid size of 98 shares, or about Rs 14,994 at the upper price band.
GK Energy plans to use Rs 322.5 crore from the fresh issue for long-term working capital, with the remainder for general corporate purposes.
GK Energy IPO Day 2: Key dates to remember
The allotment is expected to be finalised on September 24. The shares of the company are scheduled to list on NSE and BSE on September 26.
About GK Energy
Founded in 2008, GK Energy provides EPC solutions for solar-powered agricultural water pump systems under the PM-KUSUM scheme. The company operates an asset-light model, sourcing solar panels, pumps, and other components from specialised vendors and offering end-to-end services under the “GK Energy” brand.