This article provides an in-depth analysis of the Regal Resource IPO, focusing on its listing day strategy, potential opportunities, and the implications of its Grey Market Premium (GMP) on its future momentum.
Regal Resource IPO Allocation Details
The total issue size of Regal Resource IPO saw shares allocated across different categories. Qualified Institutional Buyers (QIBs) received 50% of the shares. The High Net Worth Individuals (HNIs) category was allocated approximately 15% of the shares. Retail individual investors were allocated the remaining 35% of the shares.
High Subscription & Low Retail Allotment Chances
A total of 72,917 retail investors received an allotment in this IPO, indicating that only lucky retail applicants secured shares. The low chances of allotment for retail investors were due to the small issue size and the exceptionally high subscription rates across all categories.
The IPO witnessed significant oversubscription:
- QIB Category: Subscribed over 1990 times.
- HNI Category: Subscribed approximately 357 times (Big HNI: 388 times, Small HNI: 295 times).
- Retail Category: Subscribed approximately 58 times.
- Total Subscription: Around 159-160 times.
Given the strong response, the initial chance of allotment for retail investors was one out of every 44 applications.
Valuation, Financials, and GMP Volatility
The strong response from QIBs and HNIs suggests that the company’s momentum may continue in the future. The valuation, set at a cut-off price of ₹17, is considered attractive compared to its peers. This attractive valuation has contributed to a positive strength in the Grey Market Premium despite some volatility.
Examining the company’s financial health reveals a progression in profits: ₹17 crore, then ₹22 crore, and later ₹47 crore. However, a debt-to-equity ratio of 2.08 is noted as a red flag, which long-term investors should monitor.
The Grey Market Premium (GMP) has shown some volatility and is not as attractive as expected due to several factors: overall market volatility, multiple IPOs opening simultaneously, and the small issue size. A small issue size can make the stock more susceptible to influence from operators, which might deter strong GMP momentum.
Strategy for Allottees: Listing Day and Beyond
For those who applied from a pure listing gain perspective, it is generally advised to book profits on listing day.
For long-term investors, a plan could involve holding the shares with the cut-off price as a strict stop-loss. However, it is recommended to “wait and watch” for the company’s quarterly results to continue holding.
Aggressive short-term investors who have received an allotment might consider holding if the low formed between 10:00 AM and 10:30 AM on the listing day is not broken by the closing price. Furthermore, if the low formed on the listing day and the subsequent day’s low are not broken consecutively, holding might be considered. Strict adherence to a stop-loss is crucial for aggressive short-term plans.
Opportunities for Non-Allottees
For those who did not receive an allotment, opportunities to enter the stock post-listing may arise based on the listing performance:
- 10-15% Listing Gain: This could present a short-term momentum play opportunity.
- 20-25% Listing Gain: An aggressive plan could be considered, but it requires a strict stop-loss.
- 30% Listing Gain: It is advisable to “wait and watch.” An entry might be considered if the stock experiences a downside and forms an IPO base in the future.
Current Grey Market Premium (GMP) & Listing Outlook
The Grey Market Premium for Regal Resource IPO is currently around ₹26. With a listing price of approximately ₹128, there is a potential for a listing gain of around 25%. This could translate to an estimated listing gain of approximately ₹3700 per application, as per the Grey Market Premium and associated reports.
