Cyient DLM's grey market premium rises; can it beat ideaForge at listing?

Cyient DLM is on a roll in the grey market ahead of its listing. The grey market premium (GMP) of the listing-bound player has risen following the stellar listing of the ideaForge Technology on Friday. Cyient DLM is set to make its debut on Dalal Street on Monday, July 10.

Last heard, shares of Cyient DLM were commanding a premium of Rs 130-135 per share in the grey market, about 50 per cent higher from its issue price of Rs 265 apiece. The stock was commanding a grey market premium of Rs 120 a day ago and Rs 95 at the beginning of the issue.

Analysts continue to remain positive on the Cyient DLM and expect the stock to deliver a strong listing pop on its maiden trading session. However, they believe that the gains would not be as stellar as ideaForge but investors would make a decent sum. Also, they suggest investors not to take any fresh positions on listing.
 

The GMP for the Cyient DLM IPO is currently suggesting a listing price of around Rs 395. This is a significant premium of around 50 per cent over the IPO price band , Anubhuti Mishra, Equity Research Analyst at Swastika Investmart. "We do not recommend buying Cyient DLM shares on listing day, but existing investors can hold it for a long run on the back of growth prospects," he said.

The IPO received a very strong response from investors, with a subscription rate of 71.35 times. This shows that there is strong demand for the company's shares. Also, the company's fundamentals are strong. Cyient DLM has a strong track record of growth and is well-positioned to benefit from the growing demand for digital manufacturing solutions, Mishra added.

Incorporated in 1993, Cyient DLM provides Electronic Manufacturing Services (EMS) as build to print (B2P) and build to specification (B2S) services including product design, and flexible manufacturing services tailored to meet their specific requirements.

Considering positive sentiments on Dalal Street along with stronger response given by investors, we are expecting a healthy listing gain backed by stronger parentage backup, large clientele base and healthy competitive edge in EMS business with high focus on sectors like aerospace & defence, said  Prashanth Tapse, Senior VP Research at Mehta Equities.

"We continue to believe Cyient DLM is well placed as an end-to-end integrated EMS and solutions provider for both B2P and B2S services across the EMS value chain," he added citing few risk on lower margins and high dependency on few key clients as a concern and suggested investors to book profits if we get listing gains over and above 40 per cent.

The IPO of electronic manufacturing services (EMS) company received a strong response from the investors and was overall subscribed 71.35 times. The issue was open for subscription between June 27-30 in the price range of Rs 250-265 per share. Cyient DLM remained stable in the grey market and was commanding a premium of Rs 125 per share.

The quota reserved for qualified institutional bidders (QIBs) was subscribed 95.87 times, while the portion for non-institutional bidders (NIIs) was booked 47.75 times. The allocation of retail investors was subscribed 52.17 times, while the portion for employees was booked only 2.60 times.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Business Today)

Also read: TVS Motor launches TVS RONIN in Indonesia, stock rises 

Also read: Olectra Greentech shares extend gains, jump 16% today to hit fresh 52-week high; here's why