Paradeep Phosphates IPO GMP
Paradeep Phosphates consists entirely of an offer for the sale of ₹497.73 crore by the promoters and PE investors. The issue has been priced in the band of Rs.39 to Rs.42 per share and the IPO allotment price will be discovered post the book building process completion.
The issue opened for subscription on 17th May and will close for subscription on 19th May. Check IPO Allotment Status of Paradeep Phosphates on 24th May. The stock is scheduled to list on 27th May. The GMP trading normally starts about 4-5 days prior to IPO opening and continues till the listing date.
There are 2 factors that impact the GMP. Firstly, market conditions have a deep impact on the GMP. Secondly, the extent of subscription also has a deep impact on the GMP as it is indicative of investor interest in the stock.
Paradeep Phosphates GMP
There is one small point to remember here. The GMP is not an official price point, just a popular informal price point. However, in most cases, it has proved to be a good informal gauge of demand and supply for the IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance would be.
While the GMP is just an informal approximation, it has been generally seen to be a good mirror of the real story. More than the actual price, it is the GMP trend over time that really gives insights into which direction the wind is blowing.
In the above case, the grey market premium has remained flat at Rs.3. Of course, we have to wait for the actual subscription numbers to flow in.
If you consider the upper end of the price band of Rs.42 as the indicative price, then the likely listing price is being signaled at around Rs.45 per share (by adding the GMP premium to the upper end of the price band). One data point to track will be the subscription update on the stock as that would chart the GMP course from here.
The GMP of Rs.3 on a likely upper band pricing of Rs.42 indicates a listing premium of a very robust 7.14% over the listing price. That presupposes a listing price of approximately Rs.45 per share, when Paradeep Phosphates IPO actually lists on 27th May 2022.
GMP is an important informal indicator of likely listing price, although it tends to be quite dynamic and changes direction with the flow of news. Here, investors must note that this is just an informal indication and has no official sanction. However, for traders who are in the stock for the short term, the GMP gives a reasonably good indication of the likely listing price and the likely listing returns on the IPO.
The catch is that this can grey market price can still keep changing depending on how the subscription pans out once the actual issue opens. That is why the trend of the GMP is as critical as the quantum of GMP.
About the Author
DisclaimerInvestment/Trading is subject to market risk, past performance doesn’t guarantee future performance. The risk of trading/investment loss in securities markets can be substantial. Also, the above report is compiled from data available on public platforms.
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