This Process is called Discovery Price. Listing price will be based on Supply and Demand. Based on the buy and sell orders, The price will be the value based on which maximum trade and volume can be executed
It is decided base on the market sentimaentes + competititors price of the stock and demand and supply of the stock that is buyers and seller situation in the market
Listing price of an IPO is decided by the market. Here the market mean at what price an allotee of shares sell there share and at what price a buyer want to buy share.
This is pure demand and supply Game. If an IPO given with good Rate then obviously demand will be more If Company already issued IPO with huge Premium then we may see Listing with discount...rates listing also depends upon Mkt Sentiments as well
Most of the time lead managers decide the price of the issue by thourogh market research. they do the research on the company financial or this research is availed by some research providers then these research reports are kept in front of the jury of lead managers and Institutional Investors and promoters and parallel book price and expected valuations are kept before the jury so in this process the jury decides the band of price which is nearly fair to the valuation of book price and expected value.
A company that is planning an IPO appoints lead managers to help it decide on an appropriate price at which the shares should be issued. There are two ways in which the price of an IPO can be determined: either the company, with the help of its lead managers, fixes a price or the price is arrived at through the process of book building.
Based on Demand & Supply. If there is buyers on above the issue price than share will be list on premium & if there is no buyer than share list on discount