₹136 price band, ₹80 GMP, can make money on IPO listing day itself

New Delhi. Kronox Lab Sciences Limited’s IPO will open on June 3. Investors will be able to bid for shares in the issue till June 5. The company intends to raise a total of Rs 130.15 crore through the issue. No new shares will be issued in the IPO, but the company’s promoters and existing investors will sell 9,570,000 shares through an offer for sale (OFS). Promoters Joginder Singh Jaswal, Ketan Ramani and Pritish Ramani are the selling shareholders in OFS, each of whom will sell 31.9 lakh shares. The issue will be open to anchor investors for one day on May 31. In the gray market, unlisted shares of the Cronox Lab Sciences IPO are trading at a premium of 59 percent.

Gujarat-based Cronox Lab Sciences Limited manufactures high purity specialty chemicals for the pharmaceutical, agrochemical, personal care, metal refinery and animal health products industries. It sells more than 185 products including phosphates, sulfates, acetates, chlorides, citrates, nitrates, nitrates, carbonates and gluconates in more than 20 countries including India. In the first nine months of FY24, the company’s profit rose 9.8 percent to Rs 15.5 crore on a year-on-year basis. But revenue fell by 8.7 percent to Rs 67.7 crore during the same period.

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Price band ₹129- ₹136
The Cronox Lab Sciences IPO price band has been set at ₹129-₹136 per share. There are 110 shares in one lot of this IPO. At least one lot must be applied for. If a retail investor bids for 1 lot at Rs 136 at the upper price band of the IPO, he has to invest ₹ 14,960. Retail investors can bid for a maximum of 13 lots ie 1430 shares. Thus he can invest a maximum of ₹ 194,480 in this IPO.

35 percent is reserved for retail investors.
Cronox Lab Sciences Limited has reserved 50 percent of the IPO for Qualified Institutional Buyers (QIB). In addition, about 35 percent is reserved for retail investors and the remaining 15 percent is reserved for non-institutional investors (NII).*

The gray market is showing signs of profitability.
Unlisted shares of Cronox Lab Sciences IPO are getting good response in gray market. According to IPO Watch, a website that tracks the gray market, before the IPO opened, the company’s shares had reached a premium of 58.82 percent, or ₹ 80 per share, in the gray market. In such a scenario, it may be listed at ₹216, as per the upper price band of ₹136.

The point to be noted here is that the GMP of IPO shares is not constant and may fluctuate. Also, it is not necessary that the shares of an issue trading at a premium in the gray market should also be listed at a premium in the stock market. The opposite can also happen. This means that shares can also be listed at a discount.

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