Live IPO GMP

This is a growing concern from many SME IPO investors that we have applied in many SME IPOs but we have not got a single allotment. Are we doing something wrong? Do we need to use any other process to apply in SME IPO? To understand this let's understand this with a simple example.

Let's take the example of ABC SME IPO (All calculation is just to show number, maybe some minor difference in the actual calculation.)

• The size of SME IPO is - Say 20 Cr.
• 50% HNI and 50% Retail quota.
• Lot Size: approx 1200
• IPO Price: Assume Rs 100
• 1 Retail Application amount: Rs 1,20,000

With the above example for a 20 Cr IPO

• Total Lots: 1666 (Approx)
• Retail: 833 (1 lot each)
• HNI: 416 (2 lots applications)

With this one can understand what will be your probability of getting this SME IPO.

In conclusion, the size of SME IPO is very small and lot size is very big (1,20,000) so the numbers of allottees are very less.

Where Mainboard IPO is the complete opposite of SME IPO – Size of IPO – BIG and Lot Size – Small (1K), So the numbers of allottees are much higher.

A second point is the number of times IPO oversubscribe.

GMP is traded over the counter through GMP dealers. The GMP seller only means that there is no buyer in the GMP market. This is similar to the lower circuit where there are sellers but no buyers. This situation can be caused by low IPO subscription, overselling, or negative market sentiment. This means that the listing can be at par or below the GMP price. One should consider this as a negative point.

This scenario may be temporary and may change before the day of listing. Therefore, one should always check the fundamentals and business model of the company before applying.

For every seller, there must be a buyer in the market. The same is true in the GMP market. But at some point, there are only buyers and no sellers. In the stock market, we call this the upper circuit. The same thing can happen in the GMP market if no investor is willing to sell their application. They expect a better return on the day of listing or want to hold it for a long time. One should consider this as a positive point.