What is IPO GMP, and how accurate is it?

GMP in one paragraph

The grey market is an unofficial, unregulated market where IPO shares are traded before they list on the exchange. The grey market premium is how much above the issue price those shares are changing hands. If an IPO's upper price band is ₹200 and its GMP is ₹50, the grey market is suggesting a listing price of about ₹250, a 25% gain. A negative GMP suggests a listing below the issue price.

How to use GMP to estimate the listing price

The usual arithmetic, using the upper end of the price band:

• Estimated listing price = issue price + GMP.
• Estimated listing gain % = GMP ÷ issue price × 100.
• Estimated gain per lot = GMP × shares per lot.

Why GMP changes

GMP moves with demand. It typically reacts to subscription figures (especially from qualified institutional buyers), the overall market mood, news about the company and how similar recent IPOs have listed. It can swing sharply in the days between the issue closing and the listing day, so a single day's figure says less than the trend.

How accurate is GMP?

GMP is a rough guide, not a forecast. It has no official source, it isn't regulated by SEBI or the exchanges, it is quoted by dealers who may have their own positions, and different trackers often show different numbers for the same IPO. Many IPOs list near their last GMP, but plenty list well above or below it, especially when the market turns in the days before listing.

Treat GMP as one input alongside the company's financials, valuation, subscription by category and the purpose of the issue. Don't apply for an IPO on GMP alone, and never trade in the grey market itself: it has no investor protection.

Subscription, allotment and listing

Subscription shows how many times each investor category (QIB, NII and retail) has bid for the shares on offer. Under SEBI's T+3 timeline, allotment is usually finalised the day after the issue closes and the shares list on the third working day. You can check allotment on the registrar's website or the exchange's; ShareSetu's IPO pages link to the right registrar for each issue.

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