The upcoming public issues seem to be making it big in the grey market with the premium on the rise riding on the bull run on Dalal Street. The trend indicates renewed investor interest in the primary market.
The term 'grey market premium' or GMP is used within the realms of IPOs to denote an approximate price at which the stock could potentially be listed.
The India Shelter Finance Corporation IPO, which is raising Rs 1,200 crore, saw a massive 2.34 times subscription, with its grey market premium rising to Rs 170 on an issue price of Rs 469-493. The public issue of Doms Industries, which is also aiming to mop up Rs 1,200 crore, saw its GMP reach Rs 500 on Rs 750-790 share price.
The public issue of Inox India, which hopes to raise Rs 1460 crore, saw its GMP rise to Rs 445 per share on a price band of Rs 627-660, and it was Rs 55 on a Rs 340-360 price band for Suraj Estate Developers. The Muthoot Microfin IPO had a GMP of Rs 105 per share on its price band of Rs 277-299, and for Motisons Jewellers, it was Rs 100 on an issue price of Rs 52-55.
Happy Forgings, which will open its IPO for bids on December 19 with a price band of Rs 808-850, saw its premium rising to Rs 200. The IPO of RBZ Jewellers is yet to record its GMP on a price band of Rs 95-100 per share.
"Elevated grey market premiums on the IPOs indicate anticipation of oversubscription and higher listing prices due to recent IPO successes. This trend commonly occurs in bullish markets," said Deepak Jasani, head of retail research at HDFC securities.
The year 2023 saw 54 IPOs hitting the market, marking the largest influx in two years, raising approximately Rs 49,000 crore. Out of the 48 firms listed, eight debuted at a discount. Top gainers on listing days include Tata Technologies, Ideaforge Technology and Utkarsh Small Finance Bank. Nine IPOs saw over 50 percent gains, 15 experienced a 20-50 percent increase, and 16 gained 1-20 percent upon listing.
"Certainly, it seems there's a growing trend in recent quarters where investors are attracted to IPOs anticipating listing premiums. The success of recent IPOs like data technology, Gandhar oil, care, insurgents, and renewable energy, which not only listed at a premium but also yielded substantial gains, contributes to this enthusiasm" said Sunil Shah group CEO and MD at Khambatta Securities.
"Investors believe in the potential for premiums upon allotment of shares. This sentiment also reflects in the grey market, with premium levels influenced by oversubscription. The positive outcomes in the IPO market are seen as complementary to the overall market's upward trajectory," Shah added.
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