Shanti Gold International IPO Subscribed 78x on Day 3: GMP Dips Amid Robust Demand
On July 29, 2025, the initial public offering (IPO) of Shanti Gold International Limited, a Mumbai-based manufacturer of high-quality 22kt CZ casting gold jewellery, closed its three-day subscription window with an overwhelming response, garnering bids for nearly 78 times the shares offered. Despite this strong demand, the grey market premium (GMP) has seen a decline, signaling cautious optimism among investors. Here’s a detailed look at the IPO’s performance, financials, objectives, and what the falling GMP means for potential investors.
IPO Subscription: A Stellar Response
Shanti Gold International’s IPO, which opened on July 25 and closed on July 29, 2025, aimed to raise ₹360.11 crore through a fresh issue of 1.81 crore equity shares priced between ₹189 and ₹199 per share. By 3:45 PM on the final day, the IPO received applications for over 98.53 crore equity shares against the 1.26 crore shares offered, resulting in a subscription rate of 77.79 times, as per NSE data. The breakdown of investor categories shows:
- Non-Institutional Investors (NIIs): Subscribed 150.48 times, with bids for over 19 crore shares, reflecting strong demand from high-net-worth individuals.
- Retail Individual Investors (RIIs): Subscribed 27.50 times, with applications for approximately 3.48 crore shares, indicating robust retail participation.
- Qualified Institutional Buyers (QIBs): Subscribed 111.73 times, with bids for around 14.15 crore shares, showcasing significant institutional interest, particularly on the final day.
The IPO also raised ₹108.03 crore from anchor investors, including Societe Generale, Wealthwave Capital Fund, and Rajasthan Global Securities, among others, on July 24, 2025. This strong subscription underscores investor confidence in Shanti Gold’s business model and growth prospects. However, the high oversubscription suggests a low allotment probability, with estimates indicating a 1-in-25 chance for retail investors and 1-in-104 for small HNIs.
Grey Market Premium (GMP): A Decline Amid Volatility
Despite the stellar subscription, the grey market premium (GMP) for Shanti Gold International’s shares has softened. On July 29, 2025, the GMP was reported at ₹33–₹36, down from a high of ₹39–₹40 earlier in the subscription period. This translates to an estimated listing price of ₹232–₹235 per share, implying a listing gain of 16–18% over the upper price band of ₹199, compared to earlier expectations of around 20%. The decline in GMP reflects market volatility and tempered expectations for short-term listing gains, though it still indicates positive investor sentiment.
The grey market is an unofficial platform where shares are traded before listing, and the GMP serves as a gauge of investor willingness to pay a premium over the issue price. However, GMP is speculative and not an official price indicator, and its volatility underscores the need for investors to focus on the company’s fundamentals rather than grey market trends.
Company Overview: Shanti Gold International
Founded in 2003, Shanti Gold International is a leading manufacturer of 22kt CZ casting gold jewellery, operating a fully integrated facility in Andheri East, Mumbai, spanning 13,448.86 square feet with an annual production capacity of 2,700 kg. The company specializes in intricate designs, producing bangles, rings, necklaces, and bridal sets for domestic and international markets, including the US, UAE, Singapore, and Qatar. It serves major clients like Joyalukkas, Lalithaa Jewellery, and Alukkas Enterprises across 15 Indian states and two union territories.
Shanti Gold’s financial performance is robust, with revenue growing at a 27.61% CAGR over three years, reaching ₹1,112.47 crore in FY25, and profit after tax (PAT) surging 108% year-on-year to ₹55.84 crore. The IPO is priced at a P/E ratio of 19.2 based on FY25 earnings, which is considered reasonable compared to peers like Utssav CZ Gold Ltd (P/E 19.35), RBZ Jewellers Ltd (P/E 14.42), and Sky Gold Ltd (P/E 34.53).
IPO Objectives: Fueling Expansion
The net proceeds from the IPO will be allocated as follows:
- ₹46.3 crore: To establish a new manufacturing facility in Jaipur, enhancing production capacity to 1,200 kg annually and targeting the North Indian market.
- ₹200 crore: To fund working capital requirements, supporting operational growth.
- ₹17 crore: To repay or prepay borrowings, which stood at ₹242 crore as of May 2025, improving financial stability.
- Remaining funds: For general corporate purposes, strengthening overall business operations.
This strategic allocation aims to bolster Shanti Gold’s market presence and capitalize on India’s growing organized jewellery sector, driven by increasing demand for branded gold jewellery and cultural significance in regions like South India.
Analyst Views: Mixed but Optimistic
Analysts have largely recommended subscribing to the IPO, citing Shanti Gold’s strong financials, established client base, and growth potential through exports and the Jaipur facility. Brokerages like BP Equities and Arihant Capital have assigned a “Subscribe” rating, emphasizing the IPO’s reasonable valuation and long-term potential. Anand Rathi Research recommends subscribing for medium- to long-term gains, highlighting the company’s leadership in South India and expansion plans.
However, some concerns persist:
- Commodity Price Risk: Fluctuations in gold prices could impact profitability.
- Client Concentration: Reliance on a limited number of B2B clients poses risks.
- Negative Cash Flows: Persistent negative cash flows could affect financial flexibility.
- Competitive Landscape: The jewellery sector’s intense competition requires continuous innovation.
Gaurav Goel of Fynocrat Technologies advises caution, noting that the IPO’s valuation leaves little margin of safety compared to peers, and operational risks like negative cash flows and geographic concentration warrant careful consideration.
Market Context and Risks
The overwhelming subscription reflects strong investor appetite, driven by India’s growing organized jewellery market and Shanti Gold’s established position. Posts on X highlight the IPO’s explosive response, with some estimating a subscription value of over ₹20,000 crore against a ₹252 crore demand. However, the falling GMP suggests that short-term listing gains may be modest due to oversubscription and market volatility.
Investors should also consider broader market risks, including SEBI regulatory compliance costs and the absence of long-term client contracts. The jewellery sector’s commodity-driven nature adds uncertainty, as gold price fluctuations can impact margins.
What’s Next?
The allotment for Shanti Gold International’s IPO is expected to be finalized on July 30, 2025, with refunds processed and shares credited to demat accounts by July 31. The shares are set to list on the BSE and NSE on August 1, 2025. Investors can check allotment status on the registrar’s website (Bigshare Services Pvt Ltd) or through BSE/NSE IPO portals.
Conclusion: A Promising Yet Cautious Opportunity
Shanti Gold International’s IPO has captured significant investor interest, with a near-78x subscription reflecting confidence in its growth story. The company’s strong financials, strategic expansion plans, and reasonable valuation make it an attractive option for medium- to long-term investors. However, the declining GMP and operational risks like negative cash flows and gold price volatility suggest that short-term gains may be limited, and investors should approach with caution.
For those considering investment, thorough due diligence is essential. The IPO’s success in the primary market bodes well, but its listing performance will depend on market conditions and investor sentiment. Consulting a SEBI-registered financial advisor is recommended before making investment decisions.
Disclaimer: Investing in IPOs carries market risks, and past performance is not indicative of future results. The GMP is speculative and not an official price indicator. Investors should rely on company fundamentals and consult certified financial advisors.
Sources: Business Today, July 29, 2025; LiveMint, July 29, 2025; NSE data; InvestorGain.com; posts on X.
