IPOs make a beeline as sentiment revives but grey market premiums shows investors cautious

IPO

The domestic primary market has returned to life after a three-month pause, however, the subdued grey market premiums (GMPs) of five newly-launched IPOs suggest expectations of a muted listing despite a revival in investor interest.

The latest IPOs of Borana Weaves, Belrise Industries, Leela Hotels, Aegis Vopak Terminals, and Prostarm Info Systems together aim to raise a total of around Rs 8,800 crore.

Borana Weaves and Belrise Industries have seen increased subscription from investors. The IPO of Borana Weaves has been subscribed over 40 times till now, while Belrise Industries is currently only at 0.8 times.

According to market sources who wishes not to be named, Borana Weaves’ GMP is around Rs 60 per share against the issue price band of Rs 205–216. Belrise Industries is trading at a GMP of Rs 17 on a price range of Rs 85–90. Leela Hotels is at a modest Rs 12 GMP, with an issue price band of Rs 413–435. Meanwhile, Aegis Vopak Terminals and Prostarm Info Systems are currently trading at zero GMP, despite price bands of Rs 223–235 and Rs 95–105, respectively.

Prashanth Tapse, Senior Vice President (Research) at Mehta Equities said, “The subdued premiums reflect cautious investor sentiment, driven by underwhelming performance of recently listed IPO like Ather Energy. High valuations are also deterring interest, as investors feel there’s limited upside potential.”

Ather Energy, which raised over Rs 2,981 crore through its IPO in late April, is currently trading flat compared to its issue price.

Tapse also pointed to increased regulatory scrutiny of grey market activities as another factor dampening sentiment. Sebi is reportedly working on a mechanism to regulate unofficial trading in the grey market, potentially allowing investors to trade shares in a controlled environment during the interim period between IPO allotment and listing.

The recent resurgence of IPO activity is underpinned by improving market sentiment, declining inflation, easing global tariff tensions, lower interest rates, and stronger-than-expected corporate earnings. These factors have contributed to greater market stability and buying interest during dips.

Siddarth Bhamre, Head of Research at Asit C Mehta Investment Intermediates said, “The lull in IPO activity over the past few months was primarily due to weak market conditions and uncertainty around subscription and valuations. Now, many companies are revising their valuations downward to attract investors. The subdued GMPs reflect not the fundamentals of these companies, but rather a cautious outlook on the broader market environment.”

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