IPO GMP Meaning: Grey Market Premium, Kostak & Sauda Explained
By IPOgmps Research Desk · Updated 2026-10-21
Quick answer: IPO GMP (grey market premium) is the amount above the IPO price that unofficial dealers are willing to pay for a share before it lists on the stock exchange. If an IPO is priced at ₹100 and the GMP is ₹25, the grey market expects it to list near ₹125. GMP is an unregulated sentiment signal, not a guarantee.
Key points
- GMP = the premium over the upper price band that grey market dealers quote before listing.
- Estimated listing price = upper price band + GMP; expected gain % = GMP ÷ upper price band × 100.
- Kostak is a fixed price for a whole application; subject-to-sauda is paid only if the application gets shares.
- The grey market is not regulated by SEBI: there is no legal protection and prices can be thin or moved on purpose.
- Use GMP together with subscription figures and the company’s fundamentals, never on its own.
What is GMP in an IPO?
The grey market premium (GMP) is the price, above the IPO’s issue price, at which shares of a company change hands informally before they are listed on NSE or BSE. The “grey market” is an unofficial network of dealers who quote these prices between the day an IPO is announced and its listing day.
A positive GMP means dealers expect the shares to list above the issue price; a negative GMP means they expect a listing below it. You can see today’s premiums for every open and upcoming issue on our live IPO GMP page.
How is IPO GMP calculated?
GMP is not calculated by a formula; it is the price dealers are quoting. What you can calculate from it is the estimated listing price and the expected listing gain:
- Estimated listing price = upper end of the price band + GMP
- Expected listing gain (%) = GMP ÷ upper end of the price band × 100
Example: an IPO priced at ₹190–200 with a GMP of ₹30| Item | Value |
|---|
| Upper price band | ₹200 |
| GMP | ₹30 |
| Estimated listing price | ₹230 |
| Expected listing gain | 15% |
| Profit on one lot of 75 shares (if it lists there) | ₹2,250 |
For IPOs with very high premiums, see our high GMP IPOs list, which updates through the day.
What are kostak and subject-to-sauda rates?
Besides the per-share premium, the grey market also trades whole applications:
- Kostak rate: a fixed amount a dealer pays you for your application, whether or not it gets shares. You hand over the profit (or loss) on listing day and keep the kostak.
- Subject-to-sauda (STS): a fixed amount paid only if your application is allotted shares. If you get nothing, you get nothing.
Both deals are informal, based on trust, and settled in cash. Nothing protects you if a dealer backs out.
Why does GMP go up or down?
GMP moves with demand. It usually rises when an IPO is heavily subscribed, especially by large institutions (QIBs), when the overall market is strong, or when the company is in a popular sector. It falls when the market turns weak, when subscription is lukewarm, or when listings of similar companies disappoint. Because few trades happen, a handful of dealers can move the number sharply in a day.
Watch how the premium changes across the bidding days on each IPO’s GMP tab, and compare it with the subscription trends.
Where does IPOgmps get its GMP figures?
We collect the premium from several public GMP sources through the day and show when each figure was last updated. The figure we show is the median of the latest readings from those sources, so one unusually high or low quote can’t set it, and premiums that haven’t been updated for a while are marked as stale. A GMP is published only for information: it is not a price you can trade at, and no exchange or regulator stands behind it.
GMP, kostak and subject-to-sauda at a glance| Term | What it is | Paid when |
|---|
| GMP | Premium per share over the issue price | On listing, if you sell to the dealer |
| Kostak | Fixed price for a whole application | Whether or not you get shares |
| Subject-to-sauda | Fixed price for an application | Only if the application is allotted |
How should you use GMP?
Treat GMP as one input among several:
- Look at the trend over several days, not one number.
- Check the subscription by category: strong QIB and NII demand supports the premium.
- Read the company’s financials and valuation on the IPO page.
- Remember that the listing price depends on the market on listing day, which nobody knows in advance.
Want to know how often GMP was right? Read Is IPO GMP accurate? or compare the numbers yourself on our GMP vs listing gain page.
Frequently asked questions
What is GMP in an IPO?
GMP, or grey market premium, is the amount above the IPO price that unofficial dealers pay for the shares before they list. A GMP of ₹25 on a ₹100 IPO suggests a listing near ₹125.
How do I calculate the listing price from GMP?
Add the GMP to the upper end of the price band. For a ₹200 upper band and a ₹30 GMP, the estimated listing price is ₹230, a 15% gain.
What is the difference between kostak and subject-to-sauda?
Kostak is a fixed price paid for an application whether or not it gets shares. Subject-to-sauda is paid only if the application is allotted shares.
Who decides IPO GMP?
No one officially. It is the price grey market dealers quote based on demand for the shares, so it can change quickly and differ between dealers.
Is a high GMP a guarantee of listing gains?
No. GMP is an unofficial estimate. Shares can list well below the GMP if market conditions change or if the premium was inflated.
Sources
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