R K SWAMY Limited IPO Message Board (Page 15)

Why some promoters offer shares at more than 50 percent discount to fair price. On the basis of fundamentals approx fair price can be calculated. If a share lists at more than double the issue price it means either promoter has done a mistake by offering shares much below fair price or the persons who are buying at listing price are making a mistake by buying shares much above fair price

​@investormahesh Understanding it from a broader perspective, companies or promoters having OFS, would like to get the highest price possible to benefit from the bull market sentiments so as to get the best cash out. Some promoters can be investor friendly to price in to leave something on table. Obviously the prospective investors to IPO would compare the company with peers, so that reflects into pricing, since information and analysis isn't scarce anymore nowadays.

Further, the merchant bankers have their remuneration tied to sailing the IPO, and for subscription and possible oversubscription but that can be contra productive too if it gets too overpriced which can lead to the merchant banker to come in to take a stake. The risk to reward for companies is looked at as well to appropriately price it in.

As all of this involves anticipation, the reason why GMP and listing is more for some and less for some, along with the usual collusion which happens to create hype for the IPO.

Hope it helps !!

​@MuStrFc Thanks for reply

Also, stock market participants take in consideration of future quarters earnings too, hence such premiums.
On the other hand, stock listing with such premiums are dud, they hardly move after that and wait till earnings catches up.
Ofcourse exceptions are always their, example ,doms.

Yes

​@MURTHY RAJAHMUNDRY Hello sir.. meeru R K Swamy lo work chestunara or other company employee?