Source: mint
Investors have until today, Tuesday, September 23, to place bids in the GK Energy IPO. The ₹400 crore share offering screened its opening on Friday, September 19, and the investors, regardless of type, have shown strong demand with the issue receiving solid interest. Early grey market reports indicate there should be a decent listing premium, indicating bullish expectations in the market.
About GK Energy
GK Energy Limited is a company, founded in 2008, that develops solar agricultural water pumping systems under the PM-KUSUM scheme of the Government. The company provides the complete value chain on referrals from PM-KUSUM to the farmers: survey, design, installation, commissioning, and maintenance of the solar pumps.
GK Energy follows an asset-light business model by acquiring solar panels, pumps, and related components from specialist suppliers to sell as GK Energy-branded systems. This business model is intended to allow the company to grow and scale without the need to invest in substantial expenditures in fixed assets.
Update on IPO Subscription
On the last day of the bidding period, the IPO was overall subscribed 7.99 times:
- Retail investors: 7.93 times
- Non-Institutional Investors (NIIs): 15.51 times
- Qualified Institutional Buyers (QIBs): 2.92 times
Strong demand suggests confidence in the company’s growth potential and the overall renewables sector in India.
Grey Market Premium
Investorgain.com indicates that GK Energy shares are developing a ₹20 premium in the grey market, and therefore, the stock could list at approximately ₹173. That would be a ₹20 or around a 13% increase over the upper price band of ₹153.
IPO Details
Fresh Issue: 2.61 crore shares worth ₹400 crore. Offer for Sale: 42 lakh shares worth ₹64.26 crore by promoters Gopal Rajaram Kabra and Mehul Ajit Shah
- Price Band: ₹145-153 per share
- Minimum Application: 98 shares (₹14,994 at upper band)
- Basis of Allotment: September 24
- Listing Date: September 26 on NSE & BSE
- Lead Manager: IIFL Capital Services Ltd.
- Registrar: MUFG Intime India Pvt. Ltd.
Of the total proceeds, ₹322.50 crore shall be used for long-term working capital and the remainder for general corporate purposes.
Analysis of the Sell-side Dialogue
At the end of the sell-side dialogue, Angel One suggested subscribing to the IPO due to the solar pump industry growth potential and favorable valuation. At the upper price band of ₹153, the post-IPO P/E multiple is 23.3x, which is lower than that of listed companies in the space.
Similarly, Geojit’s opinion was “subscribe,” reflecting a comforting belief in the company’s strong execution capabilities and that this product has government-supported, underlying demand. Geojit urges medium-term and longer-term holders to subscribe to the IPO.
Conclusion
Given the impressive subscription levels and a positive grey market premium, the GK Energy IPO is expected to have a strong listing. Investors seeking exposure to India’s renewable energy sector, and more specifically regarding solar-powered agricultural pumps, may want to consider investing in the GK Energy IPO.
