IKIO Lighting IPO listing today: Grey market premium corrects but strong gains still possible

Shares of IKIO Lighting will make market debut on Friday and if one were to go by trend in the grey market, the IKIO Lighting shares are likely to deliver strong listing gains,  despite some correction in grey market premium (GMP) of late.

Grey market premium (GMP) for IKIO Lighting has remained volatile ever since the issue closed for subscription last week. Last heard, the stock was commanding a premium around Rs 100 in the grey market over its issue price of Rs 285, suggesting a listing gain of 35 per cent. At its peak, GMP stood around Rs 120-125 apiece.

The premium in the unofficial market has taken a hit after the euphoria of oversubscription settled and expectations turned more realistic. Also, the sentiment in the broader markets soured, as the benchmark stock indices snapped three-day winning streak on Thursday after the US Fed policy outcome.

Considering the overwhelming response from all types of investors, one can expect a healthy 25-30 per cent listing gain, said Prashanth Tapse, Senior VP - Research, Mehta Equities.

"A better-than-expected response to IPO was mainly due to the business model of ODM, followed by its higher operating margins compared to peers and reasonable discounted valuations at the time of IPO when compared to listed peers," he said.

IKIO Lighting raised about Rs 607 crore from its initial stake sale, which was opened for bidding between June 6 and June 8. The company had set a price band of Rs 270-285 apiece for the issue with a lot size of 52 equity shares. The issue garnered a strong response from the investors during the three-day bidding process.

The IPO was overall subscribed 66.30 times, with the portion for qualified institutional bidders (QIB) getting 163.68 times subscription; the category for non-institutional investors (NIIs) was subscribed 63.35 times and the quota reserved for retail investors was booked 13.86 times.

IKIO Listing is likely to deliver an upside around 30-35 per cent on debut, thanks to its strong IPO response and sturdy premium in the grey market. Its current performance and growth potential justify the gains, said Anubhuti Mishra, Equity Research Analyst at Swastika Investmart.

"Secondly, its strong focus on R&D and backward integration, its well-established relationship with clients, and its consistent financial performance are also some reasons why this IPO is attracting such demand," she said.

Incorporated in 2016, the Noida-based IKIO Lighting manufactures light-emitting diode (LED) lighting solutions. The company is primarily an original design manufacturer (ODM). The company's LED lighting offerings focus on the premium segment.