What is GMP in IPO?
In the world of Indian IPOs, there is a secret market that starts buzzing long before the stock officially hits the NSE or BSE. Imagine you are waiting in a long line for a new iPhone launch. While you are in line, someone approaches you and offers to pay ₹10,000 extra just to take your spot or buy the phone from you the moment you step out of the store. That extra money is exactly what GMP (Grey Market Premium) is.
It is an unofficial, unregulated market where traders bet on how much a stock will be worth on its listing day. If the company is strong and everyone wants its shares, the extra price (GMP) goes up. If the company looks weak, the GMP might even be negative. While it is not an official SEBI-regulated figure, for retail investors in 2026, the GMP is often the first weather report that tells them whether an IPO will be a Bumper Listing or a Flop Show.
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What is Grey Market Premium (GMP)?
The Grey Market is an informal platform where IPO shares and applications are traded before they are officially listed.
- GMP: The additional amount investors are willing to pay over the IPO issue price.
- Calculation: If an IPO is priced at ₹500 and its GMP is ₹150, it means people are unofficially buying it at ₹650.
Why does it happen?
It happens because of Demand and Supply. If an IPO is oversubscribed 100 times, millions of people won't get shares. Those who are desperate to own the stock are willing to pay a premium to others in the grey market to secure it early.
Latest GMP Concepts: Kostak & Subject to Sauda
In the 2026 grey market, you will often hear two other terms along with GMP:
Term
What does it mean?
When is it paid?
GMP
Profit per share.
Only if shares are allotted.
Kostak Rate
Profit for the whole application.
Paid even if you get 0 shares.
Subject to Sauda
Profit for the whole application.
Only if you get the allotment.
How to Calculate Expected Listing Gain (2026 Example)
Let’s look at a hypothetical IPO for Bharat Tech Ltd in February 2026:
- IPO Price Band: ₹240 – ₹250
- Lot Size: 60 Shares
- Current GMP (Unofficial): ₹80
Calculations:
- Estimated Listing Price: ₹250 (Upper Band) + ₹80 (GMP) = ₹330
- Estimated Profit per Lot: ₹80 × 60 Shares = ₹4,800
- Percentage Gain: (₹80 / ₹250) × 100 = 32%
Pro Tip: In 2026, investors often look for a GMP of at least 20-25% before deciding to apply for listing gains.