Tomorrow marks the listing of two significant mainboard IPOs: GNG Electronics IPO and Indiqube Spaces IPO. This article will delve into their gray market premium (GMP) trends, potential listing gains, and strategic approaches for investors on their listing day. We will also explore their business models and financial health, providing a comprehensive overview to guide your decisions.
Business Models Unpacked
Both GNG Electronics Limited and Indiqube Spaces Limited operate in distinct market segments. GNG Electronics, as its name suggests, is firmly rooted in the electronics sector. It is known as a global refurbishing company, providing services for laptops, desktops, and ICT devices. The company boasts a significant presence across India, USA, Europe, Africa, and UAE, and is recognized by its brand ‘Electronics Bazaar’ in India.
Indiqube Spaces Limited, on the other hand, operates in the ‘space’ segment. This company specializes in providing working spaces to startups and corporate houses. The transcript draws a parallel to another company in this segment, Office Spaces, which saw substantial post-IPO growth, though initial IPO returns were limited. Indiqube’s business model is centered on offering these crucial workspaces.
Financial Health and Operating Margins
When assessing the financial health of these companies, a key difference emerges. GNG Electronics has consistently operated profitably, demonstrating continuous growth in its profits. However, the transcript notes that its operating profit margin is relatively low at 4.89% due to high competition in its segment.
Conversely, Indiqube Spaces is currently operating at a loss, indicating a more challenging financial position in its current state.
Gray Market Premium (GMP) Insights
The Gray Market Premium (GMP) provides an early indicator of listing day expectations. Indiqube Spaces IPO initially saw GMP of approximately ₹40-50. However, it has since experienced a significant decline, with its current GMP standing at just ₹1. This translates to about a 0.5% premium, suggesting potentially flat or minimal listing gains.
GNG Electronics IPO, however, presents a more optimistic picture. Its current GMP is in the range of ₹94-95. Based on a ₹95 GMP, the estimated listing price could be around ₹332, potentially yielding a listing gain of approximately ₹6,000 per lot for retail investors. For Small HNI and Big HNI categories, this could translate to listing gains of up to ₹80,000, according to the current GMP trends.
Listing Day Strategy: What to Expect & How to Act
For investors who have received an allotment in either of these IPOs, a clear strategy is crucial.
GNG Electronics IPO Allottees
If you applied for listing gains, it is advisable to take profits on listing day, especially if a 50-60% gain is achieved. If planning to hold for the short term, consider implementing a strict stop-loss, perhaps 5-10% below the listing price. If the share price does not fall below 5-10% of the cut-off price, positive momentum could be seen in the future. However, if the stock goes 60-70% above the cut-off price, the valuation might become expensive, requiring a strict stop-loss.
Indiqube Spaces IPO Allottees
With a significantly lower GMP, the likelihood of substantial listing gains is low. While a flat listing might occur, market momentum could lead to positive trends afterward. For those allotted, it is generally recommended to secure any positive listing gains.
For Non-Allottees (Post-Listing Strategy)
If you did not receive an allotment but are interested in these companies, consider waiting for the share price to settle. For GNG Electronics, if the price drops 5-10% below the cut-off price due to any reason, it could present a buying opportunity with a strict stop-loss. For Indiqube Spaces, a ‘wait and watch’ approach is recommended for investment planning. It’s crucial to consult a financial advisor for any investment decisions.
Long-Term vs. Short-Term Outlook
Considering a long-term investment horizon, GNG Electronics IPO appears to be the more suitable option, potentially for a 6-month to one-year holding period. However, if GNG provides 50-60% listing gain, long-term plans should be re-evaluated, and booking profits might be better.
Indiqube Spaces IPO is suggested for a short-term approach if any positive momentum continues, but a longer-term perspective requires a ‘wait and watch’ strategy. The transcript also mentions giving first priority to Indiqube Spaces IPO for short-term gains after listing, while GNG Electronics is suitable for a 6-month to a year long-term vision.
Subscription Performance & Market Sentiment
The strong subscription figures for GNG Electronics IPO highlight significant investor confidence. The Qualified Institutional Buyers (QIB) category showed robust response, and the HNI category was oversubscribed by 264 times, indicating strong fundamental backing. Retail investors also demonstrated good participation, with their category oversubscribed by 47 times, leading to a total subscription of over 150 times for the IPO.
Positive listing of these IPOs, especially GNG Electronics, is expected to positively influence the gray market performance of other upcoming mainboard IPOs. Market conditions, including the US market and the Indian Nifty (expected to trade above 24,800-25,000 around 10 AM on listing day), will play a crucial role in determining the initial momentum.
Conclusion
Both GNG Electronics and Indiqube Spaces are set to list, with GNG Electronics showing stronger prospects for listing gains based on current GMP and subscription figures. Indiqube Spaces, while facing a lower GMP, may still see positive momentum if market conditions are favorable. Investors are advised to stay updated on any last-minute GMP changes and consult with financial advisors before making investment decisions.
