Choice - Best Stock Broker in India

Menu

  • Invest
    • Stocks Icon
      Stocks
    • Commodities Icon
      Commodities
    • IPOs Icon
      IPOs
    • NPS Icon
      NPS
    • F&O Icon
      F&O
    • Bonds Icon
      Bonds
    • Mutual Funds Icon
      Mutual Funds
    •  Corporate FDs Icon
      Corporate FDs
    • MLD Icon
      MLD
    • AIF Icon
      AIF
    • Insurance Icon
      Insurance
    • PMS Icon
      PMS
  • Resources
    • Expert Assist
      • Research Icon
        Research
    • Learning
      • Choice Blog Icon
        Choice Blog
    • Calculators
      • Brokerage Calculator Icon
        Brokerage Calculator
      • Margin Calculator Icon
        Margin Calculator
      • SIP Calculator Icon
        SIP Calculator
  • About Us
  • Be a Partner
    • Authorised Partner Icon
      Authorised Partner
    • Mutual Fund Distributor Icon
      Mutual Fund Distributor
  • Pricing
  • Contact
  • Choice Group
    • Management Consultancy Icon
      Management Consultancy
    • Wealth Management Icon
      Wealth Management
    • Capital Advisory Icon
      Capital Advisory
    • Government Advisory Icon
      Government Advisory
    • Government Infrastructure Icon
      Government Infrastructure
    • Tax Advisory Icon
      Tax Advisory
    • Tax Advisory Icon
      Institutional Broking
  • Icon IconLogin
  • Login
  • Open Demat Account
  • Home
  • Blog
  • ...
  • How to Calculate GMP of IPO?
  • ...
    How to Calculate GMP of IPO?

How to Calculate GMP of IPO?

How to Calculate GMP of IPO?
  • Published Date: December 21, 2021
  • Updated Date: September 02, 2025
  • By Team Choice

While exploring IPO in the stock market, you must have come across the term GMP. It stands for Grey Market Premium, representing the price at which shares are traded in an informal market. It functions independently and is not monitored by regulatory bodies like SEBI or the stock exchange.

Many investors in the market use GMP as an indicator to predict the possible IPO listing price of a stock. A key insight for investors is to understand how to calculate the GMP of an IPO. This blog will walk you through the step-by-step process of calculating GMP.

Formula to Calculate IPO GMP

The basic formula is:

GMP = Grey Market Price – IPO Issue Price

To get a clearer perspective, investors also calculate the GMP Percentage:

GMP % = (GMP ÷ Issue Price) × 100

Open a FREE Demat Account in 5 Mins.

  • Free AMC for First Year
  • Low DP Charges (₹ 10)
  • No Auto Square Off Charges
  • Free Research Advisory
Open Now

Steps to Calculate GMP of an IPO

Step 1: Find the Grey Market Price:

The Grey Market Price is the rate or price at which shares of an upcoming IPO are being traded in the informal market, before the company is listed on the stock exchange.

Investor demand and sentiment are reflected in the GMP price. These prices can change daily based on investors’ excitement about the IPO or overall market trends.

For instance, an IPO’s issue price is ₹450, but in the grey market, buyers are ready to buy at ₹520. This means the grey market price is ₹520.

Step 2: Identify the IPO Price:

The issue price refers to the price at which a company officially offers its shares to the public through the IPO. This price is set by the company or underwriters after considering factors like valuations, demand, and the industry outlook.

For book-built IPOs, there’s usually a price band, and the final price is determined or set after the bidding process. The IPO issue price is ₹450 in our example.

Step 3: Subtract the Issue Price from the Grey Market Price:

Once you have both the values, simply find the difference between the IPO issue price and the grey market price to find the Grey Market Premium of that IPO.  

Applying Formula:

GMP = Grey Market Price – IPO Issue Price

According to the example,

  • Grey Market Price is ₹520
  • IPO Issue Price is ₹450

Grey Market Premium = ₹520 – ₹450 = ₹70

This means the shares are being traded at a premium of ₹70 in the grey market.

So, if you had applied this for the IPO, the expectation is that it might list higher than its issue price, offering potential listing gains.

Step 4: Calculate the GMP Percentage (Optional, But Useful):

While the absolute GMP tells you the premium value in rupees, the GMP percentage can help you compare different IPOs more effectively. The grey market price reflects the difference between the shares' unofficial valuation and their issue price.

Applying Formula:

GMP % = (GMP ÷ Issue Price) × 100

According to the formula,

  • Grey Market Premium (GMP) is ₹70
  • Issue Price is ₹450

GMP % = (₹70 ÷ ₹450) × 100 = 15.55% (16%)

This means investors in the grey market are valuing the stock at about 16% higher than its official issue price.

If the percentage is high, it signals strong investor demand. If the percentage is low or negative, it shows weak interest and possible listing risks.

Disclaimer: Grey Market Premium (GMP) values are based on unofficial market activity and may vary frequently. The information provided in this blog is for educational purposes only and should not be considered as financial or investment advice. Investors are advised to conduct their own research and consult a qualified financial advisor before making any investment decisions.

Conclusion

Calculating the Grey Market Premium is simple and straightforward. It helps investors get a preliminary sense of how successful an IPO could be. However, remember that GMP is just an unofficial indicator. It can change in an instant and doesn’t guarantee actual listing performance. It is advisable to consider the company’s fundamentals, industry outlook, and your investment goals along with GMP before making any decisions.  

FAQs

1. Can you explain the meaning of Grey Market Premium (GMP) in IPOs?

GMP refers to the extra price at which IPO shares are traded unofficially before listing. It indicates investor demand for the IPO.

2. Is GMP reliable for predicting IPO listing prices?

GMP provides only an estimate; it isn't always an accurate indicator. Market conditions can change the actual listing price.

3. Where can I check the GMP of IPOs?

You can check the Grey Market Price on financial news sites, stock forums, and websites specialising in IPO updates.

4. Can GMP be negative?

Yes, a negative GMP is an unofficial indicator, suggesting that the stock may list below its issue price.

5. Should I invest in IPOs based only on GMP?

No. Always consider the company’s fundamentals, industry outlook, and your financial goals along with GMP.

Recommended for you

loading

FII DII Data - Live Data

loading

Copper Price Forecast for Next Week

loading

Indian Stock Market Prediction For Next Week

loading

38 Candlestick Patterns Every Trader Should Know

Choice Financial Services

Choice International Limited , Sunil Patodia Tower,
J B Nagar, Andheri(East), Mumbai 400099.

Monday - Friday : 08:30 am - 7:00 pm
Saturday : 10:00 am - 4:00 pm

+91-88-2424-2424
care@choiceindia.com

Download App

Google PlayApp Store
QR Code

Social Media

  • Investment Options

  • Stocks
  • F&O
  • Commodities
  • Mutual Funds
  • IPOs
  • Bonds
  • NPS
  • Corporate FDs
  • MLD
  • AIF
  • PMS
  • Insurance
  • Resources

  • Research
  • Choice Blog
  • Brokerage Calculator
  • Margin Calculator
  • SIP Calculator
  • Downloads
  • Offer Document
  • Track Record
  • Investor Charter
  • Investor Grievances
  • Online KYC Updation
  • Quick Links

  • Open Demat Account
  • Corporate Demat Account
  • NRI Demat Account
  • Minor Demat Account
  • Lowest Brokerage
  • Investor Charter
  • Investor Awareness
  • Watchout Investors
  • Investor's Advisory
  • Disclaimer
  • CEBPL Policies & Disclosures
  • CFPL Policies & Disclosures
  • Sachet Portal
  • Direct Pay-in
  • Company

  • About Us
  • Investors
  • Pricing
  • Refer & Earn
  • Be a Partner
  • Read FAQs
  • Contact Us
  • Partner
  • Employee
  • Great Place To Work

  • Choice Financial Services

Choiceinternational. CIN - L67190MH1993PLC071117
Choice Equity Broking Private Limited: SEBI Reg No. Broking - INZ000160131 ( BSE - 3299 ) | ( NSE - 13773 ) | ( MSEI - 73200 ) | ( MCX - 40585 ) | ( NCDEX - 01006 ).
Depository Participant SEBI Reg. No. - IN - DP - 84 - 2015 , DP ID CDSL - 12066900 , NSDL ID - IN301895. Research Analyst - INH000000222
Choice Wealth Private Limited: AMFI - Registered Mutual Fund Distributor. Association of Mutual Funds in India Registration Number - ARN - 78908.
Initial Registration: 15th March 2010 Valid Till: 14th March 2027.
Pension Fund Regulatory and Development Authority (PFRDA) - POPSE52022022 | Affiliated with POP HDFC Pension Management Company.
Choice Finserv Private Limited: NBFC Registration Number : N - 13.02216

Choice Insurance Broking India Private Limited: IRDAI License No: 167, License Valid Till: 29-05-2027, CIN: U67200MH2002PTC137373, Category : Direct Insurance Broker ( Life & General ), Principal Officer: Vinod Kukreti, +91-96-1972-2424
Registered Office: Sunil Patodia Tower, J B Nagar, Andheri East, Mumbai, Maharashtra 400099.
Corporate Office: 12th Floor, Mittal Commercia, Near Mittal Industrial Estate, Marol Naka, Andheri East, Mumbai, Maharashtra 400059.
For any Grievances email at grievance@choiceinsurance.in

Cautionary Message :

  1. Sharing of trading credentials – login id & passwords including OTP’s:- Keep Your Password/Pin and OTP’s private & confidential to avoid any misuse or unauthorised trades. Please ensure that you do not share it with any one.
  2. Trading in leveraged products like options without proper understanding, which could lead to losses
  3. Writing / selling options or trading in option strategies based on tips, without basic knowledge & understanding of the product and its risks
  4. Dealing in unsolicited tips through Whatsapp, Telegram, YouTube, Facebook, SMS, calls, etc.
  5. Trading in “Options” based on recommendations from unauthorised / unregistered investment advisors and influencers

Disclaimer:
1. *Investments in securities market are subject to market risks, read all the related documents carefully before investing.
2. In addition to client based business, we are also doing proprietary trading.
3. Brokerage will not exceed the SEBI prescribed limit.

Research Disclaimer and Disclosure inter-alia as required under Securities and Exchange Board of India (Research Analysts) Regulations, 2014

Choice Equity Broking Private Limited (“CEBPL”) is a registered Research Analyst Entity (Reg. No. INH000000222 ) (hereinafter be referred as “CEBPL”). (CIN. NO.: U65999MH2010PTC198714).

Reg. Address: Sunil Patodia Tower, J B Nagar, Andheri(East), Mumbai 400099. Tel. No. 022-6707 9999 .

Compliance Officer: Mr.Prashant Salian. Tel. 022-67079999 - Ext-2310
Email- Prashant.salian@choiceindia.com

Grievance officer: Deepika Singhvi Tel.022-67079999- Ext-834.
Email- ig@choiceindia.com

Research Disclaimer: Investment in the securities market is subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, and certification from NISM in no way guarantee performance of the intermediary or provide any assurance of returns to investors.

Beware of Fraudulent Entities Claiming to Be Choice or Its Associates:

This is to inform you all that our official website is choiceindia.com
Please be advised that any person or business claiming to be "Choice" or using a similar name/logo without our official website domain is not associated with us. Do not make payment to any third person bank account. Payments for our services should be made only if bank account is in the name of Choice Equity Broking Private Limited and you can verify the bank details from our official website as above. We are committed to maintain the highest standards of integrity and transparency, and we urge our customers and the public at large to exercise caution and verify the authenticity of any entity claiming to be associated with Choice and do not fall prey to such fraudulent entities.

© Choice International Limited. All Rights Reserved.

  • Privacy Policy
  • Terms & Conditions