Gretex Share Broking, a Mumbai-based firm specializing in market making, stock broking, underwriting capital markets issuances, and serving as depository participants of NSDL, has filed its Draft Red Herring Prospectus (DRHP) with the capital markets regulator SEBI for an initial public offering (IPO).
The IPO, with a face value of Rs 10, comprises a fresh issue of 16.78 million equity shares and an offer-for-sale (OFS) of 3.096 million shares by selling shareholders.
The offer for sale comprises up to 8.58 lakh shares by Sashi Harlalka, up to 8.58 lakh shares by Sumeet Harlalka, and up to 13.80 lakh shares by Alok Harlalka HUF.
The offer is being made through the book-building process, wherein not more than 50% of the offer shall be available for allocation on a proportionate basis to qualified institutional buyers, not less than 15% of the offer shall be available for allocation to non-institutional investors, and not less than 35% of the offer shall be available for allocation to retail individual investors.
The company, in consultation with the book-running lead managers, may consider undertaking a further offer of equity shares of up to 33.12 lakh equity shares as “Pre-IPO placement“. If such placement is completed, the fresh issue size will be reduced.
The proceeds from the fresh issue, to the extent of Rs 130 crore, will be used for funding the working capital requirements of the company and general corporate purposes.
Gretex Share Broking Ltd. (GSBL) was established in 2010 under the leadership of Mr. Alok Harlalka. It secured registration as a market maker from BSE in 2012 and from NSE in 2023. Over its decade-long history, GSBL has served as a market maker for 31 companies listed on SME platforms of stock exchanges. Additionally, it holds a memorandum of understanding (MOU) with Gretex Corporate Services Limited, its promoter, to act as market makers for 28 upcoming SME IPOs.
The activities of market-making involve both fund-based and fee-based operations. GSBL earns fixed fees from corporations for its market-making services, comprising one-time and annual fees. Moreover, the company aims to generate revenue through spreads and other trading activities in the secondary market, including various stocks.
For booking services targeted at institutions, brokers must be impaneled with those institutions. GSBL is currently empanelled with three institutions as of September 30, 2023. The company is actively involved in the equity, currency derivatives, futures, and options segments of both the National Stock Exchange of India Limited and BSE Limited. Additionally, it engages in proprietary investments across various tradable securities.
For fiscal 2022–23, the company’s revenue from operations has increased to Rs 102.62 crore against Rs 39.66 crore for fiscal 2021–22. Profit after tax increased to Rs 46.75 crore for Fiscal 2023 as compared to Rs 8.55 crore for Fiscal 2022. Further, amongst the players considered for the industry, which includes Aryaman Financial Services Ltd., Inventure Growth & Securities Ltd., and Shreni Shares Ltd. for fiscal 2022–23, the company recorded the highest operating margin of 60.6%.
For the four months ended July 31, 2023, revenue from operations stood at Rs 20.92 crore and profit after tax stood at Rs 6.11 crore.
Over the recent years, SMEs listing in the capital markets has seen traction. For instance, during FY23, the SME market witnessed sturdy growth with 125 issues, representing an increase of 79% as compared to 70 issues in FY22. During April-July 2023, the IPO issues of SMEs reached 47 from 29 compared to the corresponding period last year, according to a CareEdge Report.
Pantomath Capital Advisors Limited is the sole book-running lead manager for the IPO, and Bigshare Services Private Limited is the registrar of the offer. The equity shares are proposed to be listed on the BSE and NSE.