Do you have an idea of the grey market price of Shriram Properties ahead of its IPO?

The Rs.600 crore IPO of Shriram Properties Ltd has already set the price band for the IPO in the range of Rs.113 to Rs.118 per share. While the issue opens today 08-December, the stock has been trading in the grey market for the last 4-5 days. Grey market is an informal market where the price of the stock is determined firstly by the market conditions and also the extent of oversubscription that the stock gets.

It must be remembered, before I go ahead, that the GMP or grey market premium is not an official price point but it is only a popular informal price point. However, the experience in the past is that the GMP has proved to be a good gauge of demand and supply for the IPO. As a lead indicator of the likely listing, the GMP does capture shift in sentiments quite well. More than just the GMP, it is the trend over time that really gives insights about the stock.

In the case of Shriram Properties, the GMP has remained constant at Rs.20 per share over the last 4 days. Things could change once the actual subscription numbers flow in. If you consider the upper end of the price band of Shriram Properties at Rs.118, then the GMP of Rs.20 hints at a likely listing price of Rs.138. Just keep an eye on how Star Health lists on Friday as that will have a bearing on market sentiments.

In the case of Shriram Properties, the GMP of Rs. 20 indicates a listing premium of 16.95% on the upper band of the listing range. This assumes a listing price of Rs.138 per share when it lists on 20th December. Let us remember a caveat here. GMP can change at short notice and tends to be optimistic more often than not.