ideaForge Tech & Cyient DLM IPOs to hit D-St next week; here' what grey market is signaling

Indian primary markets are likely to remain busy in the last week of June as two main-board issues will hit Dalal Street in the coming week, despite being a truncated one due to a public holiday on Wednesday. The success of the recent issue, the activity in the grey market has increased.

Next week IPOs of ideaForge Technology and Cyeint DLM will hit primary markets raising a cumulative of around Rs 1,160 crore. Both the companies are commanding a hefty premium in the grey market ahead of their issues kicking off for subscription on Monday and Tuesday, respectively.
 

ideaForge Technology, which is eyeing to raise Rs 567 crore from its initial stake sale, is commanding a premium of Rs 525-535 in the unofficial market, about 75-80 per cent higher from the upper limit of its given price band of Rs 638-672. The issue will be open for subscription between June 26-29.

Considering the FY23 Annualized EPS of Rs 7.68 on a post issue basis, the company is going to list at a P/E of 87.54 times with a market cap of Rs 2,800 crore whereas its peers namely MTAR Technology, Data patterns and Astra Microwave Products are trading at a P/E of 58.52 times, 84.95 times, 52.27 times, said Marwadi Financial Services in its IPO note.

"We assign 'subscribe' rating to this IPO as the company is pioneer and the pre-eminent market leader in the Indian UAS industry, with first-mover advantage and strong relationships with a diverse customer base. Also, it is available at reasonable valuation considering the future growth potential of the company," it said.

On the other hand, Cyient DLM is commanding a grey market premium of Rs 95-100 per shares, about 38-40 per cent up from the upper limit of its price at Rs 250-265. The company is eyeing to raise Rs 592 crore via primary market route between June 27-30. Dalal Street will remain closed on Wednesday, June 28 on the account of Eid al-Adha.

However, ideaForge was commanding a grey market premium of around Rs 575 apiece on June 20 but its premium has eased in the unofficial market. On the other hand, Cyient DLM's GMP has risen from Rs 90-95 on Thursday, when the price band for the issue was announced.

Analysts tracking the grey markets are swearing by the positive sentiments of the primary markets following the stellar listing of IKIO Lighting and Mankind Pharma. They said that action will continue in the primary market as it has got its mojo back but companies would need to leave something on the table for investors.

Abhay Doshi, Co-Founder at UnlistedArena said that IKIO and Mankind's success at Dalal Street has lifted the sentiments for the IPO market. "We may see more issues coming in the second half of the current calendar year but investors shall see the valuations of the issue before creating frenzy for any issue."

Also, these two issues are smaller in size with retail and HNI portions cumulatively capped at 25 per cent only. Thus, it will lead to more demand among the investors, he told Business Today adding that both the companies belong to niche businesses with strong moats.

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