Grey Market

IPO Grey Market Premium, Latest IPO GMP & Kostak Rates 2022

 

The grey market premium, also known as the IPO GMP, is information calculated based on the demand for an IPO by company. 
After the IPO date and price band announcements, the grey market begins unofficially in the unregulated market. 
Before investing in an IPO, investors always look at the premium, which can vary depending on market conditions, demand, and subscription numbers.

Current IPO GMP Rates

Check the latest IPO analysis and the estimated grey market rates with listing gain as given below:

IPO Name IPO GMP IPO Price Listing Gain
Ruchi Soya ₹30 ₹650 5%
Uma Exports ₹- ₹68
Veranda Learning ₹15 ₹137 10%
Hariom Pipe ₹- ₹153
LIC IPO -₹35 ₹-
Pharmeasy ₹50 ₹-
PE Analytics ₹- ₹114
Evoq Remedies ₹- ₹27

IPO Kostak & Subject to Sauda Rates

IPO Name Kostak Subject
Ruchi Soya ₹300 ₹-
PE Analytics ₹- ₹20000
Krishna Defense ₹- ₹15000
Uma Exports ₹300 ₹1000
Veranda Learning ₹250 ₹300

 

Let’s look at how to compute the estimated listing price after factoring in a premium. If the grey market rate for an IPO is 100 and the IPO price is around 200, the estimated listing price is around 300. According to the calculation, the listing gain will be 50% of the IPO price.
 
Due to the bull/bear market or the demand for the company’s shares, the listing price of an IPO may differ from the estimated listing price suggested by the grey market. We have seen that some IPOs had a lower grey market but a higher gain on listing, while a few IPOs in 2021 had a higher grey market but a lower gain on listing.
Although the grey market is always a strong factor in calculating IPO listing gains, we strongly advise investors to use the grey market rates for information only and not to trade based on the numbers.
 

How Do I Buy / Sell IPO Application in Grey Market?

The grey market is not associated with any official people or businesses. Based on the IPO GMP, some brokers buy and sell IPO applications on Kostak Rates or Subject to Sauda Rates. Local brokers who act as go-betweens for buyers and sellers and conduct grey market trading of IPO applications should be sought. Be aware of the rates before buying or selling.

Important Points to Consider about IPO GMP:

  • The grey market transactions are unofficial, with IPO investors and stockbrokers participating. It is dependent on both parties’ trust.
  • Before applying for an IPO, read our IPO analysis.
  • The grey market rates are calculated and provided by market research or experts.
  • We do not recommend trading on the Grey Market because it is against the law.
  • The Kostak Rate is the premium obtained by selling one’s IPO application (in an off-market transaction) to someone else prior to the issue’s allotment or listing.
  • Do not subscribe to the IPO at the above-mentioned premium. It is subject to change at any time prior to listing.
  • Subscribe only based on the companies’ fundamentals.

Past IPO Grey Market Premium of IPO 2021:

 

IPO Name Price
GMP Listed
Vedant Fashions ₹866 ₹10 ₹935
Adani Wilmar ₹230 ₹30 ₹227
AGS Transact ₹175 ₹5 ₹175
CMS Info Systems ₹216 ₹5 ₹220
Supriya Lifescience ₹274 ₹130 ₹421
HP Adhesives ₹274 ₹90 ₹315
Data Patterns ₹585 ₹300 ₹856
Medplus ₹796 ₹180 ₹1040
Metro Brands ₹500 ₹- ₹437

 

IPO Grey Market FAQs:

 

What is Grey Market Premium?

The “grey market premium,” also known as the “IPO GMP,” is a term used in the IPO market to determine the estimated price at which an IPO will be listed. The grey market is unofficial, but investors look at the grey market price of an IPO to determine the stock’s fixed gain. The grey market operates prior to the IPO listing as well as during the days between the IPO start date and the allotment date. The grey market premium predicts how the IPO will perform on the day it is listed, based on an estimated price. Let us see how the calculation progresses. If the company issues an IPO for .₹100 and the grey market premium is around .₹20, we can assume that the IPO will be listed around .₹120 on its listing day.but the fact is, there is no reliability. In most cases, IPO GMP works but in some cases, it’s not. We have observed that if the IPO is in demand and the estimated HNI and QIB subscription is on a higher side, the IPO list around the given price with estimated IPO GMP.

What is Kostak Rate?

The Kostak rate is the sum paid by one investor to the seller of an IPO application prior to the IPO’s listing. The Kostak rates react in the same way that the grey market does. One can fix their profit by buying and selling their entire IPO application on Kostak rates outside of the market. Whether an investor receives an IPO allotment or not, the buyer must pay the Kostak rates for the IPO. If a person submitted 5 applications for one IPO and sold them for 1000 rupees each, he or she has secured the IPO profit of 5000 rupees. Even if he gets the allotment in two applications, his profit will be ₹5,000. Now, if he sells the stock and receives a profit, of around ₹10000 then he or she needs to give the remaining profit of ₹5000 to the investor who bought the application. This is the secure way to sell your application in the IPO grey market.

What is Subject to Sauda?

The Subject to Sauda on the application, according to the Kostak rate, is the amount decided when the investors receive the firm allotment on their IPO Application. If one buys or sells the IPO application on the subject to sauda, it means that one can receive the stated amount if the allotment is successful; otherwise, sauda will be cancelled. One cannot predict their profit in this case because it is determined by the allotment. Again, if one receives an allotment and sells the application for around ₹100,000, and the profit on listing day is around ₹15,000, one should pay ₹5,000 to the person who purchased the application.

How to Calculate Grey Market Premium?

The IPO GMP, also known as the grey market premium, is a price that is traded on the black market prior to the IPO listing process. The calculation is based on the company’s performance, demand in the grey market, and subscription probability. Assume that the X IPO price is fixed at 200 and the grey market rate is 100, implying that the IPO may list at 300 (ie: 200+100). This is still an assumption, and the actual listing price may differ from the grey market price.

Are Grey Market Stocks Safe?

It is dependent on the broker or trader, and we believe it is risky. You will be trading at your own risk if you trade in the grey market. There may be higher-than-usual fluctuations, so proceed with caution. As we suggested, for listing gain purposes, simply refer to the IPO GMP. Be prudent and only trade in the primary market after listing.

How Do I Buy / Sell IPO Application in Grey Market?

The grey market is not associated with any official people or businesses. Based on the IPO GMP, some brokers buy and sell IPO applications on Kostak Rates or Subject to Sauda Rates. Local brokers who act as go-betweens for buyers and sellers and conduct grey market trading of IPO applications should be sought. Be aware of the rates before buying or selling.

 

Reference :- We have a team with analytical knowledge of IPO industry. At Tech99, We provide information about grey market premium, subscription, upcoming IPOs, SME IPOs and other vital information. Our portal Tech99 is mentioned on MoneyControl, CNBC18, News18, Economic times, and Businessupturn ipowatch.

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