Iran-US War impact: Latest GMPs hint at weak listing for PNGS Reva, SEDEMAC Omnitech IPO

Escalating concerns in the Middle East has not only hammered the secondary markets hard, but also dented the listing prospects of primary market players. Listing-bound companies, including both concluded issues and those awaiting their issue launch, have seen a sharp correction in their grey market premium (GMP).

Not only jittered sentiments and selling pressure in the broader markets, the IPO market has been hit hard by the weak subscription numbers following a series of dud listings in the last few weeks. Even the recent listings of Clean Max Enviro Energy Solutions and Shree Ram Twistex made their debut on weak note, ending their maiden trading session with up to 30 per cent below IPO prices.

The IPO market over the last one month clearly reflects a shift in sentiment from aggressive primary participation to cautious secondary execution. Multiple recent offerings  have either listed at a discount or struggled to sustain issue price levels post debut. This pattern is not coincidental, said said Harshal Dasani, Business Head at INVasset PMS.

"The broader equity market has been navigating geopolitical uncertainty, elevated crude volatility and intermittent risk-off global flows, which have reduced appetite for listing-day gains. Investors are no longer willing to reward IPOs purely on growth narratives or sector positioning. Earnings visibility, margin sustainability, order book strength and realistic pricing are becoming critical filters," he said. 

Action will continue in the primary markets, with listing of PNGS Reva Diamond Jewellery and Omnitech Engineering, while IPO of SEDEMAC Mechatronics shall on Wednesday, March 04. The primary offering Rajputana Stainless shall kick-off for bidding on Monday, March 09. Majority of the issues are trading at discount in the unofficial market, as per sources.

PNGS Reva Diamond Jewellery, which is set to list on Wednesday, March 04, is trading at a discount of Rs 15 apeice, or nearly 4 per cent below the issue price, suggesting weak listing for the investors. The issue was overall booked only 1.3 times, fetching less than 34,000 applications.

The IPO of PNGS Reva Diamond Jewellery was open for bidding between February 24 and 26, raising a total of Rs 380 crore from primary investors. The company offered its shares in the price band of Rs 367-386 apeice with a lot size of 32 equity shares.

Another listing-bound player, Omnitech Engineering, is trading at a discount of Rs 10-12 apiece, hinting at a 4-5 per cent loss for investors on its market debut. The Rs 583 crore-issue was only booked 1.2 times, with less than 38,000 applications. The IPO was sold in the range of Rs 216-227 apeice with a lot size of 66 equity shares between March 25-27.

The IPO of SEDEMAC Mechatronics shall open for bidding on March 04 and close on Friday, March 06. The company is selling its shares of Rs 1,287-1,352 apiece with a lot size of 11 equity shares to raise Rs 1,087 crore from investors. It's GMP has tumbled to Rs 5 only, suggesting near-to-no-gains for investors.

Another IPO-bound player, Rajputana Stainless, is commanding no premium in the unofficial market. It also means little-to-no interest from traders in the issue. The Rs 255 crore IPO will open on Monday, March 09 and close on Wednesday, March 11. The issue shall be sold in the price band of Rs 116-122 with a lot size of 110 equity shares.

Market experts believe that liquidity is selective and capital is rotating toward defensives and hard assets rather than mid-sized primary issuances. IPO pricing has to leave something meaningful on the table. Without adequate margin of safety, discount listings may continue despite decent primary subscription numbers, Dassani added.