C.E. Info Systems (MapmyIndia) IPO - Grey Market Premium

5paisa Research Team 5paisa Research Team 14th December 2022 - 02:02 am

The Rs.1,039.61 crore IPO of C.E. Info Systems (MapmyIndia) Ltd consists entirely of an offer for sale of Rs.1,039.61 crore. The issue has been priced in the band of Rs.1,000 to Rs.1,033 per share and the MapymyIndia IPO allotment price will be discovered post the book building.

The issue opens for subscription on 09-Dec and closes for subscription on 13-Dec. The stock is scheduled to list on 21st December. The GMP trading normally starts about 4-5 days prior to IPO opening and continues till the listing date.

However, 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.

Check - C.E Info System Ltd (MapmyIndia) IPO - Information Note

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 the insights about the stock being upgraded or downgraded over a period of time and which direction the wind is blowing.

A quick GMP summary for C.E. Info Systems (MapmyIndia) Ltd over the last 6 days.

03-Dec	04-Dec	05-Dec	06-Dec	07-Dec	08-Dec
Rs.600	Rs.700	Rs.700	Rs.750	Rs.700	Rs.800

In the above case, the GMP trend shows that the grey market premium has consistently improved from Rs.600 per share on 03-December to Rs.800 on 08-December; just a day ahead of IPO opening. Of course, we have to await for the actual subscription numbers to flow in. But, clearly this shows reasonable interest in the grey market ahead of the IPO.

If you consider the upper end of the price band as the indicative price, then the likely listing price has improved over the last 6 days from Rs.1,633 to Rs.1,833 per share.

One data point to track will be the listing of Star Health IPO on 10-December, which got just 79% subscribed and had to reduce the size of the IPO by Rs.840 crore. That could hold the key to IPO market sentiments and the IPO looks set to list at a discount as per grey market signals.

The GMP of Rs. 800 on a likely upper band pricing of Rs.1,033 indicates a listing premium of a robust 77.44% over the listing price. That presupposes a listing price of approximately Rs.1,833 per share, when the stock lists on 21st December. However, GMP is a dynamic price.

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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