How Accurate is IPO Grey Market Premium in Predicting Listing Price?

Updated on 29.12.2025 @ 14:20 PM

One of the most recent, and probably most talked-about IPOs is LG Electronics India. Its GMP was ₹420, which implied an expected grey market price of around ₹1,560 against an initial issue price of ₹1,140.

But here is the twist—it was listed at around ₹1,715. Hence, the question: how accurate is IPO Grey Market Premium in predicting the listing price?

In this article, we explore the accuracy of GMP. This is a tall order, as in 2025 alone, hundreds of companies have gone for IPOs. However, by analysing a select few IPOs, we attempt to arrive at some meaningful conclusions.

We also play the devil’s advocate and try to identify situations where GMP predictions actually work and where they fail.

More importantly, you will come to understand what GMP predictions “working” or “failing” actually mean in practical terms.

Finally, the article offers an expert perspective on whether or not investors should rely on Grey Market Premium as part of their IPO investment strategy. You can also track the GMP of all the IPOs at our GMP hub page which is updated regularly, but keep in mind GMP is not any official indicator and not regulated or authorised by SEBI/NSE/BSE.

Historical Data on GMP Accuracy

The Grey Market is unofficial and out of the jurisdiction of the SEBI. Any data from GMP is therefore not official. Therefore, there are no official historical data on GMP from which its accuracy can be ascertained.

Consequently, the Indian stock market, BSE, is about 150 years old, while NSE is 33 years old. The Grey Market itself is perhaps 25 years old.

More than 6,000 companies are listed on the Indian stock market.

Hence, analyzing the GMP of these companies would be “too much” and probably unnecessary, since the perspective about the grey market is almost the same for serious investors.

However, for this article, I created a table with GMP for 11 companies that went IPO in India, for this year 2025. The data presented here is referenced throughout the article. 

When GMP Predictions Work

When can it be stated that a GMP prediction actually worked?

To understand this, we must explain an intricate detail about GMP and who benefits. This has been elaborated in this article that explains how GMP works.

Once a company issues a price for its shares, which is often the upper band, retailers subscribe for an allotment of the shares. These retailers and their potential buyers make up the grey market, where they haggle over the potential opening price of the IPO.

The difference between the issue price and the speculated opening price makes up the GMP.

However, the eventual opening price either falls short of this speculated opening price or exceeds it. A GMP with the right prediction is one where the speculated opening price equals the actual opening price.

This rarely happens, and when it does, it is often remarkable for several reasons, as discussed in the last section of this article.

So, based on the data above, below are a few times GMP predictions actually work:

1. Zelio E-Mobility (SME) –

GMP 14%;

Expected ₹155;

Opened ₹154.9 → Accurate with GMP range.

1. B.A.G. Convergence (SME) – GMP 16%;

Expected ₹101;

Opened ₹101

In essence, only 2 GMPs out of the 11 listed in the table were approximately precise. 

When GMP Fails – Lessons from Past IPOs

A GMP is generally said to fail when the actual listing price is lower than the price implied by the grey market premium, or when a stock lists at a loss despite showing a positive GMP before listing.

There is also the case where the opening price is higher than the speculated GMP-based price. Is this a fail? Well, it depends.

The way the grey market works is that participants profit only up to the quoted premium. So, if the GMP is ₹100 and the stock eventually lists at a premium of ₹120, the grey market trade is still settled at ₹100. The extra ₹20 does not accrue to the grey market participant.

Would you consider this a GMP failure? Maybe.

So, below are a few IPOs where GMP expectations did not align with actual listing outcomes:

Why GMP Accuracy Changes (Bull vs Bear Markets)

The inaccuracy of the GMP is not at all unexpected. Cases where GMP is accurate are rare. And there are several reasons for this, and most of them have nothing to do with the trend of the market, bull or bear run. It all has to do with the very nature of the grey market and GMP.

1. Speculation-driven

GMP is wildly speculation-driven and is largely influenced more by emotions like greed, hope, and the need to make quick gains rather than real data that reflects the company’s value, demand for the shares, and other factors.

2. Low volume

The volume of trade in the grey market is extremely low, which doesn’t reflect the true dynamics of the market. Hence, GMP is often more or less obtained from an extremely sparse ecosystem of potential buyers and sellers.

3. Manipulation

As stated earlier, the grey market is unofficial. It isn’t outright illegal, but its activities are not monitored by SEBI, hence it is prone to manipulation. Either buyers or retailers can manipulate demand. Investors can subscribe to a large allotment just to make it seem like the company’s shares are in high demand, with hopes of influencing the opening price, but this rarely works.

4. External factors

GMP is excluded from much wider market factors. There are cases where GMP is very low, even negative, and the opening price is still high. Then there are times when the opening price almost matches the GMP, and the shares move sharply by the end of the trading session.

Frequently Asked Questions – GMP Accuracy & Prediction

1. When can a GMP prediction be considered accurate?

When the listing price is found to be in accordance with the grey market price, it is considered accurate. However, such instances are actually rare. As seen in the table above, out of 11 IPOs, only 2 were listed close to their grey market premium price.

2. Does a positive GMP always result in listing gains?

A positive GMP means the listing price is expected to be higher than the issue price. However, even if the issue lists above its issue price, based on GMP alone it cannot be accurately said that the listing will be in gain.

3. Why does GMP accuracy remain low in both bull and bear markets?

As already stated, GMP is an unofficial indicator and is neither regulated nor monitored by any official institutions. So, GMP accuracy is never guaranteed, whether it is a bull or bear market. However, in bull markets speculation is usually higher due to overall positive sentiment, but in terms of accuracy, GMP will always remain a question without a fixed answer.