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
  • ...
  • What is IPO Listing Gain
  • ...
    What is IPO Listing Gain

What is IPO Listing Gain

What is IPO Listing Gain
  • Published Date: December 21, 2021
  • Updated Date: October 01, 2025
  • By Team Choice

When a company goes public through an IPO, investors get the chance to buy its shares at the issue price before they start trading on the stock exchange. But people still don't know what is IPO. What excites many investors is the possibility of earning quick profits if the stock lists at a higher price than what they paid. These quick profits are called listing gains.

For some, There are many ways to invest in IPO for the long-term growth of a business, while for others, the main attraction lies in these short-term gains on listing day. With every upcoming IPO, investors often look forward to the possibility of such gains. In this blog, we’ll explore what listing gains mean, how they are calculated, and the factors that influence them.

What is Listing Gain in IPO?

Listing gains are the profits earned when the listing price of the stock is higher than the issue price. In simple terms, if you receive shares in an IPO at ₹100 and they start trading at ₹130 on the listing day, you make a profit of ₹30 per share.

These gains often attract retail and institutional investors because they can provide quick returns in a short period. However, not every IPO results in positive listing gains; market demand, investor sentiment, company fundamentals, and external economic factors all play a role in determining how a stock performs on its debut.

How to Calculate IPO Listing Gain?

Calculating IPO listing gain is very straightforward. It’s simply the difference between the stock’s listing price (the price at which it begins trading on the stock exchange) and the issue price (the price at which investors bought shares during the IPO).

The formula is:

Listing Gain = (Listing Price – Issue Price) × Number of Shares Allotted

Example:

  • Issue Price = ₹250
  • Listing Price = ₹320
  • Number of Shares Allotted = 40

Listing Gain = (320 – 250) × 40 = ₹2,800

This means the investor earns a profit of ₹2,800 if they sell all allotted shares at the listing price.

Remember: If the listing price is lower than the issue price, it results in a listing loss instead of a gain.

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

How to Get IPO Listing Gains

“All that glitters is not gold”, and this is true in the case of IPOs as well. Not every IPO will lead to listing gains, and not every IPO will be a success as well.

So, what are the factors that can help you in figuring out how you can get the IPO listing gains? Let us have a look.

Always Have an Exit Plan

Always have an exit plan

A little planning always goes a long way; therefore, it is essential for an IPO investor to plan the trade beforehand.

There are various IPOs that list at a good price, but then eventually do not continue the bull run. So, it is important that you know your target and  place a well-planned exit strategy.

It will ensure that you don’t suffer losses waiting for the right exit point.

Read the DRHP

Read the DRHP

The companies issue a Draft Red Herring Prospectus (DRHP) when they plan to go public with their IPOs. It includes all the details of the company's objectives, financial statements, and everything important for investors.

It is therefore important for an investor to go through the details of the DRHP, so that you know whether your financial goals are aligning with the company’s long-term interests.

Trust Your Decisions

Trust your decisions

Some IPOs are not perfect for listing gains but can have a good overall profit opportunity. So, if you have studied the company properly and carried out the fundamental analysis, you should not worry even if the IPO does not have great listing gains. If the fundamentals are strong, then there is a possibility that it will provide you with great returns in the long term.

Keep An Eye On GMP

Grey market premium plays an important role in determining the listing gains. It is the extra amount that an investor is willing to pay in the grey market for a particular IPO. Depending on the demand, the GMP can either increase or decrease.

But why is GMP important in IPO, and how to calculate GMP in IPO?

A positive GMP is usually a sign of good listing. Although this is not always true.

So, you can analyse it properly and then make a decision based on the value.

Look for Subscription

Look for subscription

The demand and supply play an important role in the decision of the listing gains. If the demand for an IPO is more, it is called an oversubscribed IPO. A lot of investors link the oversubscription to the higher listing price. While this can be true in the majority of cases, but not always.

It is still a good practice to look at the subscription status of an IPO.

Now, the majority of the potential of listing gains depends on the listing price of the IPO. It is therefore important that you understand What Affects an IPO’s Price After Listing.

Let us quickly have a look.

What Affects An IPO’s Price After Listing?

The price of an IPO after listing doesn’t move randomly; it’s influenced by several key factors. Let’s look at the most important ones:

1. Overall Market Sentiment:

If the stock market is bullish (optimistic), new IPOs often attract more buyers, pushing up prices. In bearish (pessimistic) markets, even strong companies may struggle to deliver gains.

2. Company Fundamentals:

Investors consider the company’s financial strength, growth potential, business model, and management quality. Companies with strong fundamentals typically experience higher demand on their listing day.

3. Subscription Levels (Oversubscription):

An oversubscribed IPO indicates strong investor demand. Such IPOs often list at a premium. On the other hand, under-subscribed IPOs may struggle to gain traction after listing.

4. Sector and Industry Outlook:

IPOs in trending sectors (like tech, renewable energy, or fintech) often attract more interest, resulting in higher listing prices. Sectors facing challenges may see muted demand.

5. Global and Domestic Economic Conditions:

Events such as interest rate changes, inflation, or geopolitical tensions can influence investor appetite and stock performance.

6. Grey Market Premium (GMP):

The unofficial grey market often provides early signals about expected listing gains, as it reflects investor sentiment before the actual listing.

Also Read: How IPO Listing Price is Decided

Types of IPO Listing Gain in Investment

Investors may experience different kinds of listing outcomes:

1. Positive Listing Gain: When the stock lists above the issue price.

2. Flat Listing: When the stock lists around the issue price, offering little to no gain.

3. Negative Listing: When the stock lists below the issue price, it results in a loss.

Oversubscription of an IPO

An IPO is considered oversubscribed when the number of shares investors apply for exceeds the total number of shares available for allotment. For example, if a company offers 10 lakh shares but receives applications for 30 lakh shares, the IPO is oversubscribed three times.

Oversubscription is generally an indication of strong investor interest and confidence in the company's future. It often happens when:

  • The company has solid fundamentals and growth potential.
  • Market sentiment is positive.
  • The IPO is priced attractively compared to peers.

Since demand exceeds supply, not everyone receives the full quantity of shares they applied for. In the retail category, allotment is often decided through a lottery system. An oversubscribed IPO frequently results in higher listing gains because strong demand tends to increase the stock price on the day it lists. However, this is not guaranteed; market conditions on the listing day still play a crucial role.

How Is the Post-List Price Determined?

The post-listing price of an IPO is not fixed by the company; it is decided by the market forces of demand and supply once the shares start trading on the stock exchange.

Here’s how it works:

1. Bidding by Buyers and Sellers:

After listing, investors place buy and sell orders based on what they think the stock is worth. If demand is higher than supply, the price tends to rise. When more people are selling than buying, the price decreases.

2. Investor Sentiment and Subscription Levels:

If the IPO was oversubscribed, it indicates high demand, which often pushes the opening price above the issue price. Weak subscription or negative market mood may lead to a discount listing.

3. Market Conditions:

Broader stock market trends, sector performance, and global economic cues also affect the initial trading price.

4. Company Reputation and Fundamentals:

Strong companies with growth potential usually enjoy higher demand, supporting a better post-list price.

Example:

Issue Price: ₹200

Expected Demand: High (oversubscribed 20×)

Opening Price on Listing Day: ₹260 (decided by buyers willing to pay a premium)

Conclusion

IPO listing gains can be a quick way to profit, but they also come with risks. Factors like market sentiment, company fundamentals, and oversubscription levels all play a role in determining whether investors walk away with gains or losses. While listing day excitement is tempting, it’s always wise to evaluate IPOs carefully and not invest solely for short-term profits.

If you are looking to invest in IPOs, then open a Demat account today.

FAQs

1. Is it good to sell the shares on the listing day?

It depends on your investment goals. If you applied for the IPO purely for listing gain, learning how to sell IPO on listing date can help you lock in profits on the first day. However, if you believe in the company’s long-term growth, holding could be more rewarding.

2. Is there any tax on IPO listing gains?

Yes. IPO listing gains are considered capital gains. If you sell shares on the listing day, it falls under short-term capital gains (STCG) and is taxed at 20%.

3. What happens when an IPO is oversubscribed?

In an oversubscribed IPO, applicants are not allotted the full number of shares they bid for. Instead, allotment is done proportionately or via a lottery system. Oversubscription frequently indicates strong demand, which may result in higher listing prices.

4. Can we sell the SME IPO on the listing day?

Yes, SME IPO shares can also be sold on the listing day, just like mainboard IPOs. However, SME IPOs are often less liquid, so price movements may be more volatile.

Recommended for you

loading

How to Bid in An IPO?

loading

FII DII Data - Live Data

loading

Why ESG Matters for India’s Growth Story

loading

Zinc Future Price Forecast for Next Week

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
  • Indices
  • Bonds
  • NPS
  • Corporate FDs
  • MLD
  • AIF
  • PMS
  • Insurance
  • Resources

  • Research
  • Choice Blog
  • Brokerage Calculator
  • Margin Calculator
  • SIP Calculator
  • What is Trading Account
  • Upcoming IPOs
  • 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