After a muted primary market activity in the first half of the year, grey market premiums (GMPs) or the price at which grey market shares are sold ahead of listing of an initial public offerings have surged, in a sign of renewed investor appetite that may potentially lead to more robust listing gains across both mainboard and SME issues.
The GMP of a recent IPO - Urban Company - is trading at nearly 55 percent above its issue price of Rs 103 per share following over 103x subscription, traders have said. Apart from this, Srinagar House of Mangalsutra and Dev Accelerator too have seen heavy bidding in their IPOs, with the GMP for Srinagar House of Mangalsutra hovering 19 percent higher than the issue price of Rs 165 while for Dev Accelerator, it is trading 14 percent above the issue price of Rs 61.
GMPs of Prospective IPOs Rising
Among upcoming offerings, VMS TMT, opening for subscription on September 17, is witnessing a GMP that is nearly 20 percent above its issue price of Rs 99 per share. Other upcoming IPOs - Ivalue Infosolutions and Euro Pratik Sales - set to open on September 18 and September 16 respectively, are yet to reflect in the grey market.
“This shift is driven by a robust secondary market, heavy oversubscription from both retail and institutional investors, and compelling growth narratives in high-growth sectors like green energy, technology, and infrastructure,” said Ratiraj Tibrewal, Director at Choice Capital. Tibrewal said the smaller size of recent offerings has also created a classic supply-demand imbalance, further fuelling the rise in GMPs. While this stands well for potential listing gains and could encourage more companies to go public, it also raises concerns about speculation.
The Indian markets has seen a heavy IPO pipeline in 2025 but many issues struggled to attract premiums or strong debuts. Of the 50 firms listed so far this year, 28 delivered muted listings, 13 posted gains of 10-30 percent, while only eight managed to surge over 30 percent on debut.
IPO Action in SME Segment
The SME segment public issues are riding a strong momentum, with Airfloa Rail Technology - listing on September 18 – seeing its GMP soar 119 percent from the issue price of Rs 140 per share. LT Elevator, which will debut on September 19, is quoting a GMP 28 percent higher than its issue price of Rs 78. TechD Cybersecurity, whose IPO opened on September 15, has witnessed its GMP jump nearly 83 percent over the issue price of Rs 193 per share. Sampat Aluminium and JD Cables have also posted strong grey market trends, each trading more than 15 percent above their respective price bands.
In addition, other SMEs including Karbonsteel Engineering, Taurian MPS and Jay Ambe Supermarkets are showing premiums of 15 percent, 9 percent and 11 percent respectively.
What’s Driving the GMPs
“The recent surge in GMP is largely driven by elevated investor liquidity and surplus cash seeking short-term opportunities, making upcoming IPOs attractive destinations. With equity markets performing well, interest rates remaining stable or trending downward, and inflation under control, investor confidence in new listings is understandably high, fueling increased activity in the grey market,” said Prashant Tapse of Mehta Equities.
Experts add that relying solely on GMP as an investment metric is not advisable. The grey market is unregulated and highly speculative, and GMPs can be manipulated or influenced by hype and artificial demand, often failing to reflect the actual fundamentals of the company. There have been several instances where IPOs with high GMPs have listed below expectations or turned negative after listing.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
