The GMP IPO buzz is back as Lenskart and Orkla hit the market, but here’s what the IPO grey market premium really tells you.
The IPO market is electric right now. You can practically feel the buzz.
We have two massive issues open for subscription: Orkla India (the company behind MTR and Eastern) and Studds Accessories. And tomorrow, the mega-IPO for Lenskart opens.
As always, the talk of the town isn’t just about fundamentals. It’s about the GMP IPO figures.
The IPO grey market premium (GMP) is the first thing investors ask about. It’s that spicy, unofficial number that tells you what premium a share is fetching before it even lists.
It’s pure speculation. But let’s be honest, it’s also a powerful gauge of market excitement.
Right now, the latest IPO GMP for Orkla India is hovering around ₹68 to ₹77. That suggests a potential listing gain of around 10%.
Meanwhile, the Lenskart IPO, which opens tomorrow, saw its GMP drop from ₹108 to just ₹48. That’s a sharp fall, cutting the expected premium by more than half.
This is precisely why the grey market is so fascinating and so dangerous.
I’ve always seen the IPO grey market premium as a sentiment meter. It’s not a financial tool; it’s a FOMO (Fear of Missing Out) tracker. It shows what people are willing to bet on the hype.
This frenzy is even more intense in the SME sector. We’ve seen a recent surge in SME IPO GMP figures, with some tiny companies commanding premiums of 100% or more.
It’s tempting. A high GMP suggests guaranteed IPO listing gains.
But here’s the coffee-talk truth: the GMP is just hype. It is not a promise.
I’ve seen these premiums vanish overnight. Here’s what you must remember about the GMP IPO game:
- It’s Unregulated: These are unofficial, cash-based trades. There is no legal recourse.
- It’s Volatile: As we just saw with Lenskart, the GMP can collapse based on sentiment.
- It’s Manipulable: A few big players can easily drive the GMP up to attract retail investors, only to dump their shares on listing day.
As a result, using the latest IPO GMP as your only reason to subscribe is a terrible idea.
It’s exciting to track, but it’s a poor substitute for actual research. The real question isn’t what is GMP in IPO, but what is the company’s P/E ratio? Does it have strong financials? Is its valuation fair?
Brokerages seem to like Orkla for the long term, but they note its valuation is high. They are bullish on Lenskart’s growth, but its premium has fallen.
Therefore, treat the IPO grey market premium as market gossip, not as financial advice.
The real money is made by investing in good businesses, not just in a hot listing. So, as these big IPOs close, are you betting on the company or just the hype?
