Smartworks Coworking IPO: Issue subscribed 4.15 times on last day of bidding. What GMP indicates?

Economic Times

3 days ago

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The initial public offering (IPO) of Smartworks Coworking Spaces has been subscribed 4.15 times so far on Monday, the final day of the bidding process. The issue, which opened on July 10, closes today, with the shares of the company trading at a grey market premium (GMP) of 3.7% or Rs 15-17.The non-institutional investors (NIIs) drove the highest demand, subscribing to the issue by 8.33 times, making 1,84,79,448 bids against the 22,17,233 shares reserved for them. This was followed by the qualified institutional buyers (QIBs) at 4.5 times and retail investors, with a healthy subscription of 2.35 times.GMP, or Grey Market Premium, indicates the premium at which shares of an upcoming IPO are being traded in the unofficial or "grey" market ahead of their official listing on the stock exchange.For example, the IPO price of Smartworks Coworking is Rs 387-407, and its GMP is Rs 17; this means the shares are being traded at Rs 424 in the grey market. GMP reflects investor sentiment and expectations about the listing price. However, it is unofficial, not regulated by SEBI, and can be speculative or volatile.GMP, or Grey Market Premium, is an unofficial and unregulated indicator that may not always be reliable. It is based on limited trades and market sentiment rather than actual company fundamentals. As it is largely driven by speculation, GMP can fluctuate significantly and often does not accurately reflect the true demand or the eventual listing price of the IPO.The analysts at Anand Rathi believe that the IPO is fully priced and recommend a 'Subscribe-Long term' rating to the IPO. The brokerage firm states that at the upper price band, the company is valued at P/S of 3.3x with EV/EBITDA of 9.7x and a market cap of Rs 46,448 million post issue of equity shares.SBI Securities issues an 'Avoid' rating for the issue.The brokerage firm believes that companies like Awfis Space Solutions offer better investment opportunities within the coworking space, which is currently profitable and trades at FY25 EV/Adj. EBITDA of 26.5x.SCSL has become a leading provider of office experience and managed campus platforms, focusing on long-term contracts with MNCs. While it has seen top-line growth and positive cash EBITDA at the gross level, net losses have been reported due to provisioning under new accounting standards. The company operates with high lease liabilities from fixed-cost agreements across centers, leading to significant interest and depreciation expenses under Ind AS 116. This boosts EBITDA but puts pressure on net profitability.The IPO opened for subscription on July 10 and closes today, on July 14. The allotment of shares is expected to be finalized on July 15, with the stock tentatively scheduled to list on both the BSE and NSE on July 17.While Day 1 of the bidding saw a relatively lukewarm start, demand picked up strongly on the final day, especially from institutional investors, suggesting growing confidence in the company's fundamentals and long-term prospects.'The strong traction from institutional and affluent investor segments positions the Smartworks IPO in the 'Hot' response category by market standards, particularly for a new-age commercial real estate player operating in the managed office space segment,' said Gaurav Garg of Lemonn Markets Desk.Smartworks Coworking Spaces plans to raise Rs 576–583 crore through a combination of fresh issue and offer-for-sale (OFS). The IPO, open for bidding until July 14, is scheduled to list on the BSE and NSE on July 17. The offer includes a fresh equity issue worth Rs 445 crore and an OFS of 33.79 lakh shares.The company has fixed the price band for the IPO at Rs 387 to Rs 407 per share.(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)