Introduction
An Initial Public Offering (IPO) refers to the process where a company transforms from a privately owned entity to a publicly traded one. You can invest in the company during this phase to become a part of its growth story from the initial stages.
Many companies issued an IPO in 2024. Some were listed above the Grey Market Premium (GMP), while others were priced lower. Before checking out the top 8 IPOs listed below the GMP in 2024, you must learn the meaning and significance of GMP in IPO.
What is Grey Market Premium?
GMP refers to the difference between a stock’s offered price and its trading price in the grey market. The grey market begins unofficially in the unregulated market after the announcement of the IPO.
A new IPO GMP indicates market sentiment toward the IPO. A positive GMP means the share’s trading price will be higher than the issue price because the IPO has a strong demand. On the other hand, if the GMP is negative, the share’s trading price will be below the issue price since its demand is weak.
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The expected trading price is calculated by adding the final issue price to the GMP. For instance, if the GMP is Rs. 100 and the IPO issue price is Rs. 500, the expected listing price is Rs. 600. Similarly, if the issue price is Rs. 600 and the GMP is Rs. -100, the expected trading price is Rs. 500.
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The GMP can vary based on demand, market conditions, and subscription values. You must check the latest IPO GMP before subscribing to an IPO.
Top 8 2024 subscribed IPOs with listing price below GMP
1. Stanley Lifestyles
Stanley Lifestyles had a subscription rate of 97.16 times, indicating a high investor interest. It had a GMP of Rs. 173. However, it failed to meet the investor’s expectations by listing at Rs. 494, which was lower than the estimated listing price of Rs. 542.
2. Awfis Space Solutions
The subscription rate for Awfis Space Solutions was 108.17 times greater. Investors had high expectations with a GMP of Rs. 84. But the listing price was Rs. 435, less than the estimated price of Rs. 467.
3. Indegene
Indegene had a subscription rate of 70.3 times. Despite the high expectations set by its GMP of Rs. 275, it listed at Rs. 655, which was much lower than the expected listing price of Rs. 727.
4. SRM Contractors
The subscription rate for SRM Contractors was 86.57 times. Its GMP was Rs. 70, but it failed to meet investor expectations by listing at Rs. 215.25 while the estimated price was Rs. 280.
5. Mukka Proteins
Mukka Proteins recorded an impressive subscription rate of 136.99 times. Its IPO demand was significant, and the GMP was Rs. 35. While the stock’s expected listing price was Rs. 63, it listed only at Rs. 40.
6. Platinum Industries
The subscription rate for Platinum Industries was around 99 times. With a GMP of Rs. 80, the expected listing price was Rs. 258. However, the stock opened much lower at Rs. 225.
7. Exicom Tele-Systems
Exicom Tele-Systems achieved a healthy subscription rate of 133.56 times. Its GMP was Rs. 106, but it listed at Rs. 265 only despite an expected listing price of Rs. 302.
8. Rashi Peripherals
The subscription rate for Rashi Peripherals was 62.95 times. Its expected listing price was Rs. 345 with a GMP of Rs. 34, but it was listed at Rs. 339.5.
Conclusion
GMP helps determine whether or not an IPO will perform well. It indicates the level of interest shown by investors. Therefore, it is one of the parameters you must check before investing in an IPO. However, note that GMP does not always accurately predict the listing price.
The above-mentioned companies, including Stanley Lifestyles, Rashi Peripherals, Exicom Tele-Systems, Mukka Proteins, Indegene, Awfis Space Solutions, SRM Contractors, and Platinum Industries, achieved a significant subscription rate for their IPOs despite the market volatility in 2024. However, their listing price was below the GMP. This demands caution in your market approach and the need to balance expectations against economic realities.
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