Syrma SGS Technology IPO: Check out the GMP for Syrma

25 Aug 2022 , 08:28 AM

Shares of Syrma SGS Technology, a provider of electronic manufacturing services, were trading at a premium of more than 20% on the grey market on August 24, presaging a successful opening day for the firm on August 26.

Analysts suggested that maintaining the issue price below the pre-IPO placement price, stronger financial performance, solid customer relationships, a varied product range, and experienced promoters could be the root causes of the company’s premium in the grey market.

According to analysts, Syrma’s grey market premium (GMP) was about Rs50—55, or 22—25% more than the final offering price of Rs220 per share. The issue price was considerably lower than the pre-IPO placement price, which was Rs290.

An unofficial trade platform is the grey market. Trading commences with the publication of an IPO’s price range and continues up until the listing of the shares. Syrma SGS Technology raised almost Rs840 crore through its public offering, which included a fresh issue for Rs766 crore and an offer for the sale of shares for Rs74 crore.

The company plans to use the proceeds from the new issue for general corporate objectives, the creation of an R&D facility, the expansion of production facilities, and working capital requirements. During the period of August 12—18, the IPO public was subscribed 32.61 times. The amount reserved for qualified institutional purchasers was subscribed 87.56 times, demonstrating the high level of demand in the IPO.

Shares were purchased by non-institutional investors 17.5 times over their quotas and by individual investors 5.53 times over their quotas. Given the fair valuations, the majority of analysts assigned the issue a subscribe rating.

One of India’s top exporters of electronics, Syrma offers renowned OEMs throughout the world a high-value integrated design and production solution.

Its operating revenue climbed by 42.7% to Rs1,266.6 crore in FY22, mostly as a result of an increase in the sale of manufactured items.

He added that innovation and R&D continue to be crucial for Syrma’s success and that the company’s diversified product portfolio is suitable for seizing the growth potential. The addressable market for EMS in India is anticipated to increase at a CAGR of 30%, rising from $36 billion in FY21 to $135 billion by FY26. Due to the China+1 strategy, import substitution, and government incentives including the production-linked incentive, the EMS market in India is growing.

For feedback and suggestions, write to us at [e-mail]