Frequently Asked Questions

What is Grey Market Premium (GMP)?

Grey Market Premium (GMP) is the premium per share that investors are willing to pay for an IPO application or shares before the official listing. It's an unofficial market indicator of expected listing price. GMP is calculated as: Expected Listing Price = Issue Price + GMP.

For example, if an IPO has an issue price of ₹100 and GMP is ₹20, the expected listing price would be ₹120. However, GMP is indicative and not guaranteed.

How is GMP calculated?

GMP is not officially calculated but determined by market sentiment in the grey market. It represents the premium investors are willing to pay over the issue price. GMP can fluctuate daily based on subscription trends, market conditions, and investor sentiment.

What does Kostak mean in IPO?

Kostak is the premium per application in the grey market. It's the amount paid to buy an IPO application form before allotment. If you sell your application at Kostak price, you get the premium regardless of whether you receive allotment or not.

What is Subject-to (Sub2) in IPO?

Subject-to or Sub2 is the premium paid for an IPO application that is subject to allotment. You receive the premium only if you get shares allotted. If you don't get allotment, you don't receive the premium. Sub2 is typically higher than Kostak because it's riskier.

How to check IPO allotment status?

You can check IPO allotment status through:

• Registrar's website (Link Intime, KFintech, etc.) using PAN or application number
• Your broker's platform or mobile app
• NSE/BSE websites

The basis of allotment is usually announced 1-2 days after IPO closing. You'll also receive an email/SMS if you're allotted shares.

What is the minimum lot size for IPO?

The minimum lot size varies for each IPO and is specified in the price band. For retail investors, you typically need to apply for at least 1 lot. Each lot contains a specific number of shares. For example, if lot size is 1000 shares and price band is ₹100-110, minimum investment would be ₹1,10,000 (1000 × ₹110).

What is the difference between Mainboard and SME IPO?

Mainboard IPOs: Listed on NSE/BSE main exchanges with larger issue sizes (typically ₹100+ Cr). Lower lot sizes (usually 1000 shares), higher probability of allotment.

SME IPOs: Listed on NSE Emerge or BSE SME platforms with smaller issue sizes (typically ₹10-100 Cr). Higher lot sizes (usually 1200+ shares), lower probability of allotment due to smaller issue size.

How to apply for an IPO?

You can apply for an IPO through:

• ASBA (Application Supported by Blocked Amount) via your bank
• UPI through your broker's app (most common)
• Net banking through your bank's portal

You need a Demat account and trading account. The application can be made during the IPO subscription window (usually 3-5 days).

What is IPO subscription?

IPO subscription shows how many times the IPO is oversubscribed. It's calculated as: Total Applications Received / Total Shares Offered. For example, 10x subscription means applications for 10 times the shares offered.

Subscription is tracked separately for Retail, NII (Non-Institutional Investors), QIB (Qualified Institutional Buyers), and Anchor categories.

Is GMP reliable for investment decisions?

GMP is indicative and should not be the sole basis for investment decisions. It reflects market sentiment but is not guaranteed. The actual listing price may differ from GMP predictions.

Always consider:

• Company fundamentals and financials
• Business model and growth prospects
• Industry trends and competition
• Promoter background and track record
• Valuation and price band

Consult a SEBI-registered financial advisor before making investment decisions.

Why am I not getting SME IPO allotment?

SME IPOs have lower allotment probability due to:

• Small issue size: Typically ₹10-100 Cr, resulting in fewer total lots
• Large lot size: Usually 1200+ shares per lot, reducing number of allottees
• High oversubscription: Popular SME IPOs can be oversubscribed 100x+ times
• Limited retail quota: Only 50% of issue is reserved for retail investors

For example, a ₹20 Cr SME IPO with 1200 share lot size means only ~833 retail applications (1 lot each) can be selected. With 10x oversubscription, your probability is 1 in 10.

What does "Seller Only" mean in GMP?

"Seller Only" in GMP means there are sellers but no buyers in the grey market. This is similar to a lower circuit in stock markets. It can indicate:

• Low IPO subscription or negative sentiment
• Overselling in the grey market
• Potential listing at par or below issue price

This situation may be temporary and can change before listing. Always check fundamentals before making decisions.

What does "Buyer Only" mean in GMP?

"Buyer Only" means there are only buyers and no sellers in the grey market. This is similar to an upper circuit. It indicates:

• Strong demand and positive sentiment
• Investors expecting better returns on listing day
• Potential listing at premium to issue price