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Sah Polymers grey market premium hints at decent market debut

Sah Polymers grey market premium hints at decent market debut

Sah Polymers is commanding a premium of Rs 8-10 in the unofficial market, which is about 15 per cent higher than its issue price of Rs 65

Sah Polymers raised Rs 66.3 crore via its initial public offering which was open for bidding between December 30, 2022 and January 4, 2023 Sah Polymers raised Rs 66.3 crore via its initial public offering which was open for bidding between December 30, 2022 and January 4, 2023

Sah Polymers is likely to make a decent market debut on Thursday, suggests trends in the grey market. Last heard, Sah Polymers was commanding a grey market premium (GMP) of Rs 8-10 in the unofficial market, which was about 15 per cent higher than its issue price of Rs 65. The premium in the grey market stood at Rs 6-8 at the beginning of this week.

With good subscription levels and strong premium in the grey markets, Sah Polymers may have a positive listing, said Santosh Meena, Head of Research at Swastika Investmart.

"The business has a wide range of clients from different industries and regions, as well as a robust product offering. A management team with expertise is also advantageous," he said. "It relies on a limited number of clients, and the issue size was also small," Meena said.

Sah Polymers raised Rs 66.30 crore via its initial public offering that ran from December 30, 2022, to January 4, 2023. The issue was sold in the range of Rs 61-65 apiece and was subscribed a solid 17.46 times.

The quota reserved for retail bidders was booked 39.78 times in the four-day bidding process. The quota reserved for non-institutional buyers was subscribed 32.69 times. The quota reserved for institutional bidders saw 2.4 times bidding.

Sah Polymers is expected to list around Rs 75, a 15 per cent premium over the issue price, considering the grey market signals, said Manish Khanna, co-founder of Unlisted Assets.

"The business prospects are fully priced in, with fewer moats and less visibility of growth in the future. Considering opportunities available in the listed markets at better valuations, investors can exit Sah Polymers post listing and reallocate capital," he said.

The market for polymers is anticipated to reach $790 billion by 2027, expanding at a CAGR of 5.5 per cent from 2022 to 2027.  Sah Polymers is a manufacturer and seller of Polypropylene/High-Density Polyethylene FIBC Bags, Woven Sacks, HDPE/PP Woven Fabrics, and Woven polymers.

On the other hand, Abhay Doshi, co-founder at UnlistedArena is not gung ho over the subscription status or the business model of the company. He cited volatile sentiments of the broader market may also weigh on the sentiments.

"Subscription numbers are apparently inflated considering the small issue size of the company and there is nothing significantly unique about the company," he said.

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Published on: Jan 12, 2023, 8:19 AM IST
Posted by: Priya Raghuvanshi, Jan 12, 2023, 8:16 AM IST