Data Patterns (India) Ltd IPO - Grey Market Premium

5paisa Research Team 5paisa Research Team 14th December 2022 - 05:18 pm

The Rs.588.22 crore IPO of Data Patterns (India) Ltd consists of a fresh issue of Rs.240 crore and an offer for sale of Rs.348.22 crore. The issue has been priced in the band of Rs.555 to Rs.585 per share and the IPO allotment price will be discovered post the book building.

The issue opens for subscription on 14-Dec and closes for subscription on 16-Dec. The stock is scheduled to list on 24th December. 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, the 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.

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 about which direction the wind is blowing.

A quick GMP summary for Data Patterns (India) Ltd over the last 6 days for which GMP is available.

08-Dec	09-Dec	10-Dec	11-Dec	12-Dec	13-Dec
Rs.250	Rs.250	Rs.400	Rs.500	Rs.500	Rs.550

In the above case, the GMP trend shows that the grey market premium has scaled up from Rs.250 per share to Rs.550 per share; more than doubling over the last 6 days. Of course, we have to await for the actual subscription numbers to flow in. But, clearly this shows good interest in the grey market ahead of the Data Patterns IPO.

If you consider the upper end of the price band of Rs.585 as the indicative price, then the likely listing price is being signalled at around Rs.1,135 per share. 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.550 on a likely upper band pricing of Rs.585 indicates a listing premium of a very robust 94.02% over the listing price. That presupposes a listing price of approximately Rs.1,135 per share, when Data Patterns lists on 24th December.

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. However, investors must note that this is just an informal indication and has no official sanction.

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