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No, the GMP is not always a 100% accurate or reliable indicator, and it is not a good decision to rely solely on the GMP when applying for an IPO.
The IPO of Easy Trip Planners (EaseMyTrip) was offered at Rs. 187 per share and in the grey market, the stock was trading at almost 70% GMP. Based on the GMP, the stock was expected to make a good listing gain, but it was quoted at Rs 212 with a price gain of only 12%.
This clearly shows that GMP should not be the only factor to look at while subscribing to an IPO. Investors need to pay more attention to the company’s fundamentals, valuations and growth prospectus to realise gains.
GMP should only be considered as a reasonable indicator of an IPO's listing.