What is the difference between IPO GMP and grey market price?

IPO GMP vs Grey Market Price: What’s the Difference?

1. Definitions

IPO GMP (Grey Market Premium): The premium or discount at which IPO shares trade in the unofficial grey market compared to the issue price.

Grey Market Price: The absolute price at which IPO shares are being traded in the grey market before listing.

2. Key Differences

Parameter IPO GMP Grey Market Price
What it represents Premium/discount to issue price Actual trading price
Calculation GMP = Grey Market Price – Issue Price Determined by supply-demand in grey market
Example ₹50 premium on ₹200 issue price ₹250 trading price
Usage To gauge premium/discount percentage To know exact trading value

3. Practical Example

For an IPO with:

  • Issue Price: ₹500
  • Grey Market Price: ₹600

Then:

  • GMP: ₹100 (20% premium)
  • Grey Market Price: ₹600

4. Why Both Matter

GMP helps you understand:

  • How much premium investors are willing to pay
  • Market sentiment about the IPO

Grey Market Price helps you:

  • Know the exact price for trading
  • Calculate potential profits/losses

5. Important Notes

  • GMP is derived from the grey market price
  • Both are unofficial indicators
  • Actual listing price may differ significantly
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