Home / Markets / Ipo /  Metro Brands IPO: GMP signals Rakesh Jhunjhunwala tag not enough to boost demand

Metro Brands IPO: Despite ace investor Rakesh Jhunjhunwala name tagged with Metro Brands Limited, its public offer received tepid response from the investors. In 3-day bidding, the public issue worth 1,367.51 crore got subscribed 3.64 times. Despite Rakesh Jhunjhunwala tag, shares of Metro Brands fail to impress grey market as well. According to market observers, Metro Brands shares are trading at a premium of 22 in the grey market today.

Metro Brands IPO GMP

Market observers said that Metro Brands IPO GMP today is 22, which is 3 lower from its yesterday's grey market premium (GMP) of 25. Market observers went on to add that Metro Brands IPO grey market premium has been oscillating around 20 to 25 for around a week that signals that big Rakesh Jhunjhunwwala-backed public issue received tepid response from investors that got reflected in its grey market performance. They said that higher valuation could be another reason for investors not bidding for the issue and planning to enter after its share listing.

What this GMP mean?

As per the market observers, GMP is simply estimation by the grey market in regard to the listing gain from the IPO. As Metro Brands IPO GMP today is 22, it simply means that grey market is expecting that Metro Brands shares would list around 522, which is at par with its price band of 485 to 500 per equity share.

However, stock market experts said that grey market premium keeps changing on daily basis and it has nothing to do with the financials and balance sheet of the company. It is completely unofficial and non-regulated by any institution. So, one should not take grey market data seriously. They advised investors to look at the balance sheet of the company as it gives concrete and clear picture of the public issue's fundamentals.

Highlighting the fundamentals of this Rakesh Jhunjhunwala-backed company's IPO, Choice Broking report says, "MBL is one of the largest footwear retailers with around 3-4 per cent market share in the organized market space and assigned subscribe rating to the IPO. In FY21, whole footwear retailing was impacted by the pandemic-led restrictions. Thus, we have bench-marked the IPO valuation to the performance during FY19-20. At a higher price band of 500, MBL is demanding a P/E multiple of 89.2 (to its average earnings of 5.6 per share over FY19-20), which is a premium to peer average multiple of 71.7. It has reported strong financial performance with robust cash flow generation. The company is consistently paying dividends since FY2000."

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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