Syrma SGS Technologies IPO: GMP jumps. Should you subscribe?

Syrma SGS Technologies IPO (initial public offering) opened for subscription on 12th August 2022 and it will remain open for bidding till 18th August 2022. As of 3:50 pm on day 3 of the bidding, the public issue has been subscribed 1.92 times whereas its retail portion has been subscribed 2.44 times, NIIs 2.64x and QIBs 0.56x. Meanwhile, premium of Syrma SGS Technologies shares has surged in grey market. According to market observers, Syrma SGS Technologies shares are available at a premium of ₹40 per share.

Syrma SGS Technologies IPO GMP

As per the primary market observers, Syrma SGS Technologies IPO grey market premium (GMP) today is ₹40, which is ₹15 higher from its Tuesday evening grey market premium of ₹25. Market observers said that the rise in grey market premium of Syrma SGS Technologies shares can be attributed to the positive sentiments at the secondary markets. They said that rise in GMP is expected to continue as there are two more days left for bidding and market sentiments are highly bullish after Dalal Street finished on positive note on sixth straight session on Tuesday.

What this GMP mean?

Market observers said that Syrma SGS Technologies IPO GMP today is ₹40, which means grey market is expecting Syrma SGS Technologies IPO listing around ₹260 ( ₹220 + ₹40), which is around 18 per cent higher from Syrma SGS Technologies IPO price band of ₹209 to ₹220 per equity share. They said that grey market is currently expecting 18 per cent listing gain from the IPO.

However, stock market experts said that grey market premium is not an ideal indicator about success or failure of a public issue. They advised investors to look at the balance sheet of the company as it would give concrete picture of the company's financials.

Syrma SGS Technologies IPO: Apply or not

Speaking on Syrma SGS Technologies IPO, Abhay Doshi, Founder at UnlisteArena.com said, "Syrma is one of the leading Electronics system design and manufacturing (“ESDM”) company focused on exports. The company has a diverse customer base and product portfolio which evolves with changing needs and developments in technology. The company is also undertaking manufacture of modules for 5G technology infrastructure as well as controllers of EV battery management system amongst other products. The revenues have been growing steadily while the profit margins have shrinked, which seems to be a concern. Thus, it would be keen to watch how the company addresses shrinking margins ahead. The last Pre-IPO placement was undertaken at ₹290, however the issue still looks moderately to fully priced."

Giving 'subscribe' tag to the public issue, Santosh Meena, Head of Research at Swastika Investmart said, "Syrma SGS Technology Ltd is one of India's leading and fastest growing Electronics system design and manufacturing (ESDM) companies. With a huge focus on R&D-based innovation and an experienced management team, the company has managed to enter into various growing segments like PCBA, Radio Frequency Identification (RFID), Electromagnetic and electromechanical parts, and other information technology-related products, including motherboards, DRAM modules, SSD and USB drives. The company’s business model starts from product concept design and focuses on every segment of the overall industry value chain; this gives them a competitive advantage over traditional OEM or ODM-based companies that focus on a single process or certain stages of production, thus creating lasting relationships with its marquee clients. Further, the geographically diversified manufacturing locations enable them to efficiently cater to the requirements of their customers in north and south India. Additionally, the business has had success using inorganic means to add new product lines and expand its geographic reach. The issue has been priced at a premium valuation, which is acceptable given its growth potential and competitive advantages. And therefore, we recommend investors to subscribe the issue."

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