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A strong market debut for Syrma SGS as stock ends listing day at 42% premium

A strong market debut for Syrma SGS as stock ends listing day at 42% premium

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By Sandeep Singh  Aug 26, 2022 3:53:46 PM IST (Updated)

Syrma IPO listing: The Syrma SGS Technology stock began its journey on the bourses at a premium of 18-19 percent over the issue price.

Syrma SGS Technology —  a Chennai-based engineering and designing company that provides solutions to original equipment manufacturers — made a strong debut on stock exchanges on Friday. This is the first main-board listing on Dalal Street in about three months.

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The Syrma stock listed at Rs 262 apiece on BSE — a premium of 19.1 percent over the upper end of its IPO price range. On NSE, Syrma SGS shares began their journey at Rs 260 apiece, a premium of 18.2 percent.
Syrma settled at Rs 313.1 on BSE and Rs 312 on NSE on the listing day — a premium of around 42 percent.
The listing was in line with the trend in the grey market — an unofficial market for unlisted securities — in the past few days. Ahead of the listing, dealers said Syrma SGS Tech commanded a grey market premium (GMP) to the tune of Rs 15-65, powering hopes of demand for the stock in the listed world.
Syrma SGS's initial public offering (IPO), to raise up to Rs 840 crore, saw bids for almost 33 times the shares on offer in the IPO, which was open for subscription from August 12 to August 18.
The initial share sale received a strong response from different categories of investors.
CategorySubscription (No. of times the shares on offer)
Qualified institutional buyers87.6
Non-institutional investors17.5
Retail5.5
Syrma SGS Technology aims to use the proceeds from the IPO to fund its capex and working capital requirements, and for general corporate purposes.
“About Rs 500 crore of the proceeds are going for plant expansion. This is between greenfield and brownfield. We have already added one more plant in Manesar in this quarter that has just started and one R&D center in Chennai," Sandeep Tandon, Executive Chairman at Syrma SGS Technology, told CNBC-TV18.
The company expects a margin of 11-12 percent in the year ending March 2023:
“We want to stick to the same margin profile that we had last year – that’s our aspiration. Industry is growing at 40 percent and we should try to match industry growth. This year, we should do around Rs 1,700 crore of revenue,” Tandon added.
The IPO was a combination of fresh issuance of shares and an offer for sale by existing shareholders. Potential investors could bid for Syrma SGS in a range of Rs 209-220 per share in multiples of 68, making one lot worth Rs 14,212-14,960.
"Syrma SGS was priced very attractively... The sector has very strong tailwinds. That was one of the key reasons why you've seen this kind of listing gains," Dharmesh Mehta, MD and CEO of DAM Capital Advisors, told CNBC-TV18.
"Hopefully, with the kind of the growth story that is in there, as was mentioned by the management on the roadshows, there will be good upside on the stock if they are able to deliver on what they have promised," he said.
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