LG Electronics IPO Grey Market Premium Rises as Stock Jumps 51% Post-Listing

LG Electronics India’s IPO has become a major talking point. On listing day, its shares leapt by about 50-51% from the issue price. Before the listing, the grey market premium (GMP) had already been climbing. That set the stage for a big surprise. In this article, we walk through the GMP journey, why the stock jumped, and what it means for investors and future IPOs.

What Is Grey Market Premium (GMP)?

Grey market is an unofficial market where investors trade IPO shares before they list on formal exchanges. GMP is the extra money people are willing to pay there above the IPO price.
It’s not regulated, but it serves as a strong sentiment indicator. If GMP is high, many believe the IPO listing will be strong. If GMP falls, interest might be weak.

LG Electronics IPO Snapshot

• Issue size & structure: LG India’s IPO is purely an offer for sale (OFS) of about ₹11,607 crore, with no fresh capital raised.
• Price band: ₹1,080 to ₹1,140 per share.
• Subscription: On the final day, it was oversubscribed ~54×.
• Allocation of demand:
    • QIB (Qualified Institutional Buyers) portion saw very heavy bids.
    • The retail share also received good interest.

Because it’s an OFS, the company did not receive proceeds; existing shareholders sold shares.

GMP Trend Before Listing

We saw a rising GMP in the days before listing:

• On Day 2, GMP was quoted at ~₹298.
• On Day 3, it hovered again around ₹298, slightly lower than the prior day.
• Just before listing, GMP surged. Some reports put it in the ₹400–₹420 range.
• On listing day, GMP was quoted around ₹426 in some sources.

That meant many expected a listing ~30-35% above issue price.

This rising GMP suggested strong confidence among traders and early investors.

Post-Listing Performance: ~51% Jump

When the stock finally listed:

• On BSE, it debuted at ₹1,715, which is ~50.44% above the ₹1,140 issue price.
• On NSE, it began at ₹1,710.10, about 50.01% premium.
• In intraday trading, the stock touched ₹1,736.40 on BSE.
• It closed somewhat lower than intraday highs but is still ~48% up from the issue.

So, nearly a 51% gain is accurate when considering peak moves and the jump from issue to listing.

This performance made LG India’s IPO among the strongest recent billion-dollar exits.

Surge in Grey Market Premium After Listing

After listing, the GMP story continued to be relevant:

• The pre-listing GMP had already built expectations of a strong listing.
• Because the actual listing matched or exceeded many GMP predictions, traders saw that their signals were valid.
• Some GMP quotes continued to trade even after listing, reflecting speculative interest and desire for additional gains.
• The alignment of GMP and listing performance enhances confidence in future GMP signals.

Thus, the grey market, though unofficial, keeps playing a role even post listing, especially when momentum is strong.

Investor Sentiment and Market Buzz

We from market watchers, analysts, and investors sensed strong euphoria. Some key observations:

• Analysts immediately gave bullish ratings. For example, brokerage Motilal Oswal initiated coverage with a “BUY” and target ₹1,800.
• The media spotlight was intense, due to the high GMP, big subscription, and the bold listing.
• Retail investors felt validation when the listing matched GMP expectations.
• Institutional investors likely saw this as a proof point for strong demand in India’s consumer durable sector.

In sum, sentiment was overwhelmingly positive. The IPO became not just a transaction, but a statement of investor confidence.

Financial Strength and Growth Outlook

To understand why the market responded so strongly, we look at LG India’s fundamentals:

• For FY25, LG India’s profit grew ~45.8% (₹2,203.35 crore), and revenue also rose ~14.1%.
• The company enjoys healthy margins. Its ROE and ROCE are estimated to be in favorable ranges.
• LG India has a broad product portfolio: home appliances, entertainment electronics, etc. That diversification helps in shifting markets.
• They are pushing localization, which can reduce costs and improve margins.
• Expansion plans: there’s talk of new manufacturing capacity, possibly making India an export hub.

These fundamentals gave investors confidence that the stock’s jump wasn’t just speculative hype.

Risks and Concerns

Even in a strong rally, we must recognize risks:

• Royalty / parent payments: The parent company may demand higher royalties. That could squeeze margins.
• Raw material volatility: Fluctuations in input costs (metals, semiconductors) can hurt profitability.
• Competition: The consumer electronics space is intensely competitive, both domestically and globally.
• Corporate governance / tax risks: Some analysts and governance firms have flagged potential tax or related-party concerns ~₹4,717 crore.
• Valuation stretch: When an IPO rises 50% on day one, some may worry it’s overvalued relative to sustainable earnings.

These are real factors we investors should watch going forward.

Impact on Upcoming IPOs

LG’s strong showing may ripple across the IPO market:

• Boosts confidence: Other consumer or durable goods IPOs might see higher demand, as investors see LG’s success as validation.
• Higher GMP expectations: Grey market players may demand steeper premiums for new IPOs, expecting big listing gains.
• Cautionary benchmark: New issuers will be measured against LG’s performance; they must show stronger fundamentals or growth stories.
• More scrutiny: Regulators, analysts, and investors may dig deeper into governance, risk, and profitability in future IPOs.

Conclusion

LG Electronics India’s IPO journey, from rising GMP to a 50-plus percent listing jump, was dramatic and instructive. The grey market played its role as a barometer of demand. The listing largely matched expectations, validating many, and elevating investor mood.

Still, the road ahead is not without challenges. Costs, governance, competition, and valuation will all matter. But for now, LG’s IPO stands as a landmark success. If you’re watching IPOs or planning to invest, this case shows how powerfully market expectations and fundamentals can combine.

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Disclaimer:

This content is for informational purposes only and is not financial advice. Always conduct your research.