Veranda Learning Solutions IPO - Grey market premium

5paisa Research Team 5paisa Research Team 13th December 2022 - 11:38 pm

The Rs.200 crore of Veranda Learning Solutions IPO consisted entirely of a fresh issue of Rs.200 crore. The issue has been priced in the band of Rs.130 to Rs.137 per share and the IPO allotment price will be discovered post the book building.

The issue opened for subscription on 29th March 2022 and closed for subscription on 31st March 2022. The stock is scheduled to list on 08th April, Thursday. 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.

Here is a quick GMP summary for Veranda Learning Solutions Ltd over the last 6 days for which GMP is available.

31-Mar	01-Apr	04-Apr	05-Apr	06-Apr	07-Apr
Rs.15	Rs.15	Rs.15	Rs.15	Rs.15	Rs.15

In the above case, the GMP trend shows that the grey market premium has been consistently at Rs.15 per share. The actual subscription numbers came in at 3.53 times but that does not appear to have had any impact on the grey market premium. But, clearly this shows good interest in the grey market ahead of the IPO listing, even in tough markets.

If you consider the upper end of the price band of Rs.137 as the indicative price, then the likely listing price is being signalled at around Rs.152 per share. This is the likely listing price based on the issue price at the upper band plus the indicative GMP.

The GMP of Rs.15 on a likely upper band pricing of Rs.137 indicates a listing premium of a healthy 10.95% over the listing price. That presupposes a listing price of approximately Rs.152 per share, when the stock of Veranda Learning Solutions lists on 08th April 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. However, investors must note that this is just an informal indication and has no official sanction. This GMP is just an unofficial indication and does not have any official or regulatory sanction of any kind.

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