IPO Listing Price

The share market is a game of fluctuating prices. This is the reason that well-researched investments let you earn money from the share market. Now there are various options for investments including IPOs in the share market. If the IPO listing price is good, the investors can make great profits very quickly. 

But the question here is, what is the IPO listing price? 

Let us have a closer look at all the details in this article.  

IPO Listing Price in India

When we talk of the IPO meaning, we can say that it is a process for a private company to become public or simply get listed in the stock market. It is only after the IPO listing that an individual can successfully trade the shares of a company in the secondary market. 

IPO listing price, therefore, is the price at which the IPO gets listed in the secondary market on the day of IPO listing. 

It is usually different from the offer price of the IPO. The offer price is the price at which the company is selling the shares of the company in the primary market. Whereas the listing price is the one at which the shares will be available for trade in the secondary market. 

For example- A company ABC wants to sell 100 of its shares to retail investors through an IPO. So after determining the valuation of the company, the offer price is decided to be ₹100/share. But because of various factors, on a listing day, the share gets listed for ₹120/share. So here ₹120 is the IPO listing price. 

A lot of people enter the IPO market to make the best use of IPO listing gains. The listing price determines the best for the investors. 

The listing price can be higher or even below the offer price depending on various factors majorly including the demand and supply of the IPO. 

Once the IPO lists at its listing price, the normal trading session begins and the stock can now be traded in the secondary market just like the other securities. 

In most cases, if the IPO is in demand, i.e, oversubscribed, there are chances that it will list at a great price. Now recently all the IPOs have been showing this positive listing run in the share market. 

But is it always the case? 

The answer is no. Recently the PayTm IPO creed a lot of buzzes not because of great profits but the situation turning the opposite direction. 

The issue price of the IPO was ₹2150. However, on a listing day, it got listed for ₹1955, thus registering a loss of almost 27% right at listing. 

So, therefore it is very important for an investor not just to keep an eye on the opened IPOs but also the benefits it can give on its listing. 

Let us now have a look at how the IPO listing price is decided. and how you can also make the best out of it. 

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How IPO Listing Price is Decided? 

You can sell your IPO shares on a listing day and earn great profits if the IPO listing price is high. But there can be certain cases, wherein instead of booking great profits, you can also face losses on the IPO listing day. Therefore, there are certain factors that can affect the price of an IPO on a listing day. 

• The demand and supply have a major role to play in the determination of the listing price of an IPO. If the IPO is in high demand and has been subscribed over what is the actual supply, it signifies that the IPO can have a good listing price. 

For example, if a company XYZ is bringing an IPO of 100 shares, but the IPO has received over 200 applications, this means that the IPO is in good demand and has been oversubscribed. 

• There are various reasons why a company initiates an IPO. One of those reasons is to expand their business or increase the operational cost. If the company has good growth potential it will have potentially a good interest of the investors and a good listing price. 
•  Another factor the affects the IPO listing price is the grey market premium. Wondering why GMP is important in IPO. It is the premium amount that has observed a good indication for the listing price. Higher GMP can have a good impact on the listing price of the IPO and vice versa. 
• The market sentiments also drive the listing price of an IPO. If the investors are taking a keen interest in the IPO, it has better chances of a good listing price. 

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Conclusion

These are the various factors that can have an impact on the price. 

IPO listing price is the key to the success of an IPO. It is not just in the primary but also in the secondary market.

It is most of the time either higher or lower than the issue price of the IPO.

Therefore, it is important that you track all the factors and also the listing price of the IPO shares. It gives you an indication of whether to start investing or trading particular shares in the secondary market. 

If you are drawn to the increasing interest of investing in an IPO, then open your Demat account today! Fill in the form below and start investing in the share market right away.