The public issue of GNG Electronics has entered its second day of bidding, and the buzz in the grey market is hard to ignore. The IPO, which opened on July 23, is set to close on July 25. The Grey Market Premium (GMP)s is a widely tracked unofficial indicator. The company’s shares are reportedly trading at Rs 105 above the issue price, suggesting a potential listing at Rs 342 per share. That is a 44.3% premium over the IPO’s upper price band of Rs 237.
But while the grey market excitement is real, it is also important to note that GMPs are speculative and not a guarantee of listing performance.
GNG Electronics IPO: Subscription status far
As of Day 2, GNG Electronics IPO has been subscribed 16.90 times overall so far. As of now retail investors have subscribed 16.32 times. Similarly, the Non-institutional investors (NII) portion was subscribed 38.16 times. Qualified institutional buyers (QIBs) saw a 1.80 times subscription.
GNG Electronics IPO: IPO snapshot
The total issue size of Rs 460.43 crore consists of a fresh issue of 1.69 crore shares, worth Rs 400 crore and an offer for sale (OFS) of 0.26 crore shares, totalling Rs 60.44 crore
The price band is fixed at Rs 237 per share, and the shares will be listed on both BSE and NSE, with a tentative listing date of July 30. The allotment is expected on July 28.
The issue is being managed by Motilal Oswal Investment Advisors Ltd, with Bigshare Services Pvt Ltd acting as the registrar.
Risks to watch: What GNG Electronics warned investors
While the IPO is attracting attention, GNG Electronics has clearly flagged several risk factors in its Draft Red Herring Prospectus (DRHP. Here are some of the company’s key warnings as per the fillings
“As of six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, we derived 75.59%, 67.87%, 79.97% and 89.12%, respectively, of our operational revenue from only sales of laptops and therefore its continued success is necessary for our business and prospects. Any decline in the demand for such product may have an adverse impact on our business, revenue and profitability.”
“Increase in the prices of parts and materials essential for our operations may negatively impact our business and financial performance. Furthermore, our ability to procure these parts and materials may be affected by price fluctuations in the future.”
“Our Company’s positive cash flow from operating activities is significantly influenced by changes in working capital loans. A reduction in the availability or utilization of these loans could adversely affect our Company’s operational cash flow and its ability to manage working capital requirements.”
“We depend on our sales network for the distribution of our products. Any disruption in such network may adversely affect our business and results of operations.”
“Our revenue generated from outside India accounts for a significant portion of our revenue from operations. As of six months period ended September 30, 2024, Fiscal 2024, Fiscal 2023 and Fiscal 2022, we derived 75.65%, 57.97%, 50.53% and 40.20%, respectively, of our revenue from outside India. Any failure to manage our business in overseas markets or our inability to grow our business in new geographic markets may affect our growth, which may have a material adverse effect on our business, operations, prospects or financial condition.”