Grey Market Premium of Paras Defence & Space Technologies IPO

5paisa Research Team 5paisa Research Team 15th December 2022 - 07:19 am

The Rs.170.78 crore offer for sale of Paras Defence & Space Technologies consisted of a fresh issue of Rs.140.60 crore and an offer for sale of Rs.30.18 crore. The issue had been priced in the band of Rs.165 to Rs.175 per share. The issue had closed for subscription on 23-Sep and the basis of allotment had been finalized on 28-Sep.

With demat credits to eligible shareholders on 30-Sep, Paras Defence is slated to get listed on the bourses on 01-October, Friday. Ahead of listing, one of the key parameters of evaluating the potential listing is the GMP or the grey market price.

It must be remembered that 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 also gives 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 observed to be a good mirror of the real picture. More than the actual price, it is the GMP trend over time that matters.

One of the key factors that impacts the GMP in most of the cases, is the extent of oversubscription. Now, Paras Defence & Space Technologies IPO was oversubscribed a whopping 304.26 times overall. On a granular basis, it was the HNI segment that led the way with 927.70X subscription while QIBs were 169.65X and Retail was 112.81X. That has surely made the GMP premiums very robust in the informal trading market.

Check:- Paras Defence & Space Technologies IPO Subscription Day 3

As per updates on Thursday, 30-Sep, the Paras Defence & Space Technologies IPO is commanding a premium of Rs.235 over the issue price in the grey market. The GMP has been steady in the range of Rs.200 to Rs.235 over the last 10 days.

The GMP did open at around Rs.160 but soon soared above Rs.200 and has held there ever since. That was expected after the sterling response to the Paras Defence IPO and robust oversubscription that the issue received.

The current GMP translates into a 134.29% premium over the upper band of the issue price of Rs.175. Also, it hints at a listing price of approximately Rs.410 when the stock lists on Friday 01-Oct. Of course, subsequent price performance will depend on HNI selling, since funded applications were quite high.