InvestorQ : What is the Grey Market Price and how to interpret the grey market price of Medplus Health Services?
Dia Deshpande made post

What is the Grey Market Price and how to interpret the grey market price of Medplus Health Services?

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swati Bakhda answered.
5 months ago
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The GMP or grey market price is an informal price indication in an informal market. GMP is typically impacted by two factors. Firstly, the market conditions have a significant impact on the GMP. Secondly, the quantum of subscription also has a deep impact on GMP since the grey market pricing is normally very closely related to the extent of oversubscription.

Let me clarity that the GMP is not an official price point. It is an informal price point based on informed expectations of traders. The experience has been that in most cases the GMP proved to be a good indicator of demand and supply for the IPO. It is normally the trend of the GMP that is really important.

If you look at the GMP of Medplus over the last 4 days, it has gone up from Rs.220 to Rs.300 over the last 4 days. That clearly shows positive momentum. Of course, we would have to await for the actual subscription numbers to flow in. But, early indicators are that the stock should command a substantial premium in the market.

How do we interpret this GMP figure. If you consider upper price band of Rs.796, then based on the GMP of Rs.300 as the indicative premium, the listing price is being signalled at around Rs.1,096 per share. Now a premium of Rs.300 on a base price of Rs.796 translates into a listing premium of 37.7% over the listing price.
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