Tega Industries closed its IPO for subscription on 3 December 2021 and is scheduled to get listed on 13 December 2021. The offer received massive subscription and the allotment is to be finalized today. The Kolkata-based company which makes consumables for mining industry has received a very impressive response in its initial offering and Tega Industries IPO GMP is also quite strong.
Tega Industries IPO was subscribed 219.04 times against the planned sale of 95.68 lakhs shares. It is noteworthy that the IPO has no fresh issue and all the 1,36,69,478 equity shares are offered by existing shareholders and promoters. Price band of the INR619.22 crores IPO was kept at INR443- 453 per share.
Highest demand in the IPO came from the HNI (NII) segment which got whopping subscription of 666.19 times, the portion set aside for QIB received subscription of 215.45 times and the RII category was subscribed 29.44 times.
High demand from HNI section is a strong indicator of smart money chasing of a stock. This demand can further propel the stock after listing. For example, recent offers of Latent View Analytics and Go Fashion were subscribed 850 and 262 times respectively and these offers rewarded IPO investors very handsomely.
These precedents are greatly positive for Tega Industries. It is also noteworthy that the unlisted shares of Tega Industries IPO are trading with profits in the gray market. As of 8 December, the GMP of Tega Industries IPO is at 66% over the higher end of issue price of INR453. In the last 10 days, the average of Tega Industries GMP stood at INR370 per share, indicating over 80% premium. Strong response from the market and high grey market premium (GMP) indicates a healthy listing for Tega Industries shares.
Tega Industries IPO GMP high: How should investors approach?
Given the strong Tega Industries IPO GMP, there are reasons to be positive about the stock after listing. Nevertheless, it is never a bad idea to book partial profits, let’s say in 50% shares on listing. Another approach investors can take is to book profits to the extent that original investment is recovered and is available for reinvestment.
Just a word of caution at this point. Since grey market is totally informal, it is totally possible for these rates and assumptions to change if the markets correct further. In any case, investors can make use of a loss from top to contain damage while maximizing returns.
Strong IPO ratings and company performance
ICICI Direct Research assigned subscribe rating for this IPO. “Tega’s strong market position, innovative products, and higher entry barriers likely to help maintain its margins while consistent growth with high repeat business (74%) would augur well in the long run,” it noted in its report.
Similar sentiments were shared by AngelOne which highlighted a number of positives about Tega Industries. The report placed a subscribe rating on the IPO and described the company as
- A leading producer of specialized and “critical to operate” products, with high barriers to replacement or substitution.
- Insulated from mining capex cycles, as products cater to after-market spends, providing recurring revenues.
- Consistent growth characterized by operational efficiency & high repeat business.
- Diverse global presence with strong manufacturing & sales capabilities
In the following table, it can be clearly seen that even during the Covid 19 pandemic, the company demonstrated healthy and positive financial gains and was able to maintain profitable fiscal years and quarters.
| FY 2019 | FY 2020 | FY 2021 | Q1 FY 2022 | |
| Revenue | 643.1 | 695.6 | 856.7 | 179.4 |
| Expenses | 598.4 | 638.1 | 675.6 | 163.8 |
| Net income | 32.7 | 65.5 | 136.4 | 11.9 |
| Margin % | 5.1 | 9.4 | 15.9 | 6.6 |
While Tega Industries IPO GMP has been strong and so has been the company’s performance, a lot will depend on market conditions at the time of listing.
