What is IPO listing gain?

The IPO listing gain is the positive difference between the IPO issue price and the IPO listing price.

The IPO Issue Price is the price of the IPO share decided by the Issuing Company at the time of the IPO Offering. The IPO listing price is the price determined by the stock exchange in the pre-open trading session of an IPO on the day of the listing between 9:00 and 10:00 am.

For example, suppose a company issues 10,000 shares at a price of Rs 50 in an initial public offering. Due to high demand in pre-open trading session, the stock exchanges set the price of the stock at Rs 60.

In this case:

• IPO Issue Price: Rs 50 per share
• IPO Listing Price: Rs 60 per share
• IPO Listing Gain = IPO Listing Price - IPO Issue Price = 60 - 50 = Rs 10 per share.

Note:

• The IPO listing gains are taxable as short-term capital gains at 15%.
• The price of IPO shares may move in any direction after 10 a.m., when regular trading begins.