The GB Logistics Commerce IPO opened on January 24, 2025, and closed on January 28, 2025, with a strong 172x subscription. Despite this high demand, the shares of GB Logistics Commerce were listed at a 20% discount on the BSE SME platform. The issue price for the shares was set between ₹95 to ₹102 per equity share, but the listing price came in at ₹81.60, leading to a significant loss for early investors who were expecting strong listing gains.

About GB Logistics Commerce Limited

GB Logistics Commerce operates in two key business sectors: logistics and trading of agricultural commodities. The company offers full truckload freight services to large and medium-sized enterprises, managing logistics through both proprietary and third-party transportation services. Their services include regular transportation, special handling, delivery above the ground floor, and managing shipments in difficult-to-reach areas. The company's offerings cater to diverse transportation needs across various industries, making it a significant player in the logistics sector.

IPO Details and Subscription

The GB Logistics Commerce IPO was a book-built issue that raised a total of ₹25.07 Crores. The IPO was entirely a fresh issue, with 24.57 Lakh shares offered to the market. Retail investors were required to invest a minimum of ₹1,22,400 for 1,200 shares, while High-Net-Worth Individuals (HNIs) had to invest ₹2,44,800 for 2,400 shares.

The IPO subscription saw massive interest, with the final day subscription at 172.29x, which indicates overwhelming demand. Despite the enthusiasm, the grey market premium (GMP) remained ₹0, suggesting no potential listing gains. The IPO's market capitalization at the ₹102 issue price was estimated to be ₹83.58 Crores.

Grey Market Premium and IPO Review

The grey market premium (GMP) for GB Logistics Commerce IPO was reported as ₹0, reflecting minimal interest in the grey market for the shares. This was a significant concern for investors looking for listing gains, especially after the company’s solid subscription numbers. Grey market trading typically helps investors gauge the potential listing price of an IPO, but in this case, it suggested that the market wasn’t expecting strong performance from the stock post-listing.

Despite the strong financial performance of the company, including revenues of ₹5,085.30 Lakh for the six months ending on September 30, 2024, and a profit after tax (PAT) of ₹252.80 Lakh, the company's valuation at the issue price of ₹102 per share did not inspire confidence among retail investors. The P/E ratio of 10.55x pre-issue and 17.19x post-issue was attractive compared to the industry P/E ratio of 79x, but investors may have been cautious about the potential for listing gains due to the low grey market premium and perceived risks in the logistics and agricultural sectors.

Key Objectives of the IPO

The net proceeds from the IPO will be used for several purposes, including:

1. ₹500 Lakhs for prepayment or repayment of outstanding borrowings.
2. ₹937.77 Lakhs for working capital requirements to expand the company's operational capacity.
3. ₹380 Lakhs towards the purchase of truck chassis and truck bodies to enhance logistics infrastructure.

Challenges and Considerations for Investors

Even though the company’s financials demonstrate steady growth, the listing discount and lack of any grey market premium raise concerns about the stock's immediate potential. Investors should carefully assess the company’s ability to utilize proceeds effectively and whether the stock offers long-term value at this discounted listing price. Given the company's relatively low valuation compared to its industry peers and the financial metrics provided, GB Logistics Commerce could still offer potential for long-term investors, but short-term listing gains seem unlikely.

Conclusion and Recommendations

While the GB Logistics Commerce IPO showed strong subscription numbers, the 20% discount at listing has raised alarms for investors seeking quick gains. The IPO’s grey market premium did not reflect any strong listing gains, and investors are advised to consider avoiding this IPO for listing gains. Instead, those interested in the logistics sector and long-term potential may choose to monitor the stock’s performance over time and decide based on future developments.

The Upcoming IPOs in this week and coming weeks are Chamunda Electricals.

The Current active IPO are Malpani Pipes And Fittings and Dr. Agarwal's Health Care.

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