Find out how the Dreamfolks Services IPO is faring in the grey markets

The Rs.562.10 crore IPO of Dreamfolks Services Ltd consists entirely of an offer for sale of shares by the promoters and early shareholders. The issue has been priced in the band of Rs.308 to Rs.326 per share and the IPO allotment price will be discovered post the book building of shares is completed during the IPO process. 

The issue opens for subscription on 24-Aug and closes for subscription on 26-Aug (both days inclusive). The stock is scheduled to list on 06th September 2022. The GMP trading normally starts about 4-5 days prior to IPO opening and continues till the listing date. However, in the case of Dreamfolks IPO, the price band was only announced over the weekend so the grey market trading has only started from Monday 22nd August onwards.

There are 2 factors that impact the GMP. Firstly, the market conditions have a deep impact on the GMP, which includes the levels of the Nifty and Sensex. Secondly, the extent of subscription also has a deep impact on the GMP as it is indicative of investor interest in the stock. Generally ,strong QIB subscription is a trigger for a spike in GMP.

There is one small point to remember here. The GMP is not an official price point, just a popular informal price point. However, in most cases, it has proved to be a good informal gauge of demand and supply for the IPO. Hence it does give a broad idea of how the listing is likely to be and how the post-listing performance of the stock could be. 

While the GMP is just an informal approximation, it has been generally seen to be a good mirror of the real story. More than the actual price, it is the GMP trend over time that really gives insights about which direction the wind is blowing. Here is a quick GMP summary for Dreamfolks Services Ltd. We have only considered one day data that is available.

In the above case, the GMP trend shows that the grey market premium has opened on 22nd August at around Rs85 and it has been steady at that level since opening. Of course, we have to await for the actual subscription numbers to flow in as that would have a very significant impact on the GMP. In the case of the previous IPO of Syrma SGS Technology, the GMP improved significantly after the issue was subscribed more than 87 times by the QIBs. For a start, Dreamfolks Services Ltd has shown good traction in the grey market.

If you consider the upper end of the price band of Rs.326 as the indicative price, then the likely listing price is being signalled at around Rs.411 per share. One data point to track will be the subscription update on the stock as that would chart the GMP course from here. As mentioned, the QIB subscription is a key trigger for the GMP pricing.

The GMP of Rs.85 on a likely upper band pricing of Rs.326 indicates a listing premium of a healthy 26.07% over the listing price. That presupposes a listing price of approximately Rs.411 per share, when Dreamfolks Services Ltd lists on 06th September 2022. However, that would depend on the GMP sustaining over the next couple of days.

GMP (grey market price) is an important indicator, albeit informal, of likely listing price. However, the GMP tends to be quite dynamic and changes direction with the flow of news and events. Investors must note here that this is just an informal indication and has no official sanction.