@PLAZA Regarding low GMP,
1) Most of the people including me think that the current GMP of Rs.13 is very low for the current market condition. But the textile sector is not fancy one and so always undervalued.
2) My finding is that the latest GMP of Rs.13/- for Cotfeb is matching with the one of the peers namely Lagnam as detailed below.
United Cotfab:
i) Asking P/E = 13.89 times as per DD
ii) Post P/BV = 2.41 as per DD
iii) EPS based Mar 2024 earnings and IPO price = Rs.5.04 (i.e. Rs.8.67 crores / 1.719 crores of shares = Rs.5.04)
iv) Post equity capital = Rs.17.19 crores
Lagnam
i) P/E Ratio = 16.5 as per DD.
ii) P/BV = 2.46 (Based on March 2024 earning figure – NSE data)
iii) EPS = 8.25 (As per March 2024 earning figure – NSE data)
iv) Equity capital = Rs.17.66 crores (NSE data)
Justifcation for current GMP of Rs.13
P/BV is more or less matching for both the companies.
Equity share capital is also more or less matching.
So taking the P/E Ratio of 16.5 (Lagnam) for United Cotfeb also, the probable listing price works out Rs.83/- (i.e. 5.04 x 16.5 = 83.16 rounded off to 83). This is clearly matching with IPO Price + current GMP (i.e. 70 +13 = 83).
3) Expected listing price/closing price for United cotfab on 24-06-2024
By taking the current price of Lagnam (Rs.151.49 on 21-06-2024 (4.76% jump on single day)), the current P/E Ratio works out 18.36 times (i.e. 151.49/8.25 = 18.36) and so we may expect listing price of United Cotfab up to Rs.93 (i.e. Rs.5.04 x 18.36 = 92.53 rounded off to 93), if market condition is good.
Conclusion: Man proposes, market disposes.
Disclaimer: I am allotted with one lot and I may be biased.