InvestorQ : How has been the grey market price movement for Electronics Mart India IPO?
NISHA Nayak made post

How has been the grey market price movement for Electronics Mart India IPO?

Priyanka N answered.
1 month ago

As you are aware the Rs500 crore IPO of Electronic Mart India Ltd has been priced in the band of Rs.56 to Rs.59 per share. The issue will be open from 04th October 2022 to 07th October 2022 (both days inclusive). While the company will finalize the basis of allotment on 12th October 2022, the will be listed on 17th October 2022. The grey market price (GMP) trading starts 4-5 days prior to IPO opening and continues till the listing date. Normally, GMP is a function of market conditions and the extent of subscription for the IPO. Remember that GMP is not an official price point, just a popular informal price point.

GMP is a good mirror of the real stock story and your focus should principally be on the GMP trend over time. On 29ths September, the stock started in the grey market at a premium of Rs21 and has surged to a level of Rs33-34 now. The 1.69 times subscription on the first day of the IPO has helped the matters. If you consider the upper end of the price band of Electronic Mart at Rs.59 as the likely discovered price, the likely listing price is being signalled at around Rs.92 per share. This would keep evolving as the days pass by and the subscription data becomes more evident to the investors.

The grey market price of Rs.33 on a likely upper band pricing of Rs.59 indicates a listing premium that is fairly robust at 55.93% for Electronic Mart India Ltd. This pre-supposes a listing price of Rs92 when the IPO of EMI lists on 17th October 2022. However, as I have stated earlier, this is just an approximation and it is also informal. That means you must only use the GMP as a guide not as an indicator. It tries to approximately capture the market mood and it is nothing beyond that. Contrary to what some people believe, the GMP does not have any official sanction.