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Lenskart and Groww IPOs saw GMPs drop 75 percent post-subscription despite strong oversubscription, highlighting risks of chasing grey market hype over company fundamentals.
News18
The grey market premium (GMP) of two heavyweight initial public offerings (IPOs) of recent times — Lenskart Solutions and Groww — has seen a sharp dip following the closure of their subscription windows. The decline reflects the prevailing market sentiment, where most public issues have struggled to sustain momentum post-listing, barring a few exceptions like LG Electronics.
GMPs of both Lenskart and Groww have dropped nearly 75 per cent from their record highs.
GMP is driven by market sentiment and is subject to constant change. The ‘grey market premium’ essentially indicates investors’ willingness to pay more than the issue price of a stock.
Despite the volatility in GMPs, investors actively participated in both IPOs, leading to oversubscription during the three-day window.
Lenskart Solutions IPO attracted strong interest across categories, receiving bids worth Rs 27,494 crore for 9.97 crore shares on offer — an overall subscription of 6.86 times. Qualified institutional buyers (QIBs) subscribed 6.5 times, non-institutional investors (NIIs) 8.6 times, and retail investors 5.37 times, while anchors had already taken up their full quota worth Rs 3,268 crore. Even employees showed robust participation, subscribing 3.9 times to their reserved portion.
Meanwhile, the Groww IPO was oversubscribed 17 times, reflecting strong investor enthusiasm. The retail portion was subscribed 9.4 times, NIIs 14.20 times, and QIBs a massive 22.02 times.
Gap in Unlisted Price And IPO Price
However, a trend has emerged among retail investors who, lured by the promise of “the next multibagger,” invest heavily in unlisted shares expected to go public soon. In pursuit of quick gains, they often end up buying these shares at inflated prices.
Recently, a gap has widened between unlisted share prices and their eventual IPO listing prices, leading to mounting losses for retail investors.
For instance, unlisted shares of Groww once traded as high as Rs 155 before falling nearly 17 per cent to around Rs 127–128, still above the IPO’s upper price band of Rs 100.
The HDB Financial Services (HDB) IPO also highlighted the risks of the unlisted market. Before its issue, HDB’s unlisted shares were trading around Rs 1,225, but the IPO was priced at Rs 740. The stock debuted at Rs 840, offering only modest listing gains.
Yash Sedani, Assistant Vice President, Investment Strategy at 1 Finance, explained that several recent IPOs have been priced below their last traded prices in the unlisted space — signalling a clear mismatch between grey market valuations and institutional pricing.
“Many of these transactions took place a year before the IPO and were aggressively marketed to retail investors by intermediaries,” Sedani said. “The hype, coupled with low float and limited price discovery, has pushed valuations to irrational levels in certain cases.”
So, What Should Investors Do?
GMP merely reflects market sentiment — not the true worth of a stock. Investors should avoid being swayed by grey market hype. Treat GMP as a sentiment indicator, not a promise of listing gains.
Instead, focus on company fundamentals, valuation comfort, promoter track record, and long-term business prospects. In short — don’t chase GMP; chase quality.
Sedani advised investors to begin with valuation when entering the unlisted space. “If an unlisted stock is priced at a premium to comparable listed peers, despite lower liquidity, no exit path, and limited disclosures, that’s a concern,” he said.
He further recommended prioritising companies with consistent profits, strong governance, and audited disclosures, while steering clear of new-age firms without a profitability track record.
Finally, he cautioned against insider or early-stage investor exits before the IPO, as these may signal value exhaustion.
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst…Read More
Varun Yadav is a Sub Editor at News18 Business Digital. He writes articles on markets, personal finance, technology, and more. He completed his post-graduation diploma in English Journalism from the Indian Inst… Read More
November 08, 2025, 15:55 IST
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