How does an IPO price get set?

Strong demand for the company will lead to a higher stock price . In addition to the demand for a company’s shares, there are several other factors that determine an IPO valuation, including industry comparables, growth prospects, and the story of a company.

Continuous Trading for IPOs (New listing) and Re-listed scrips happens from 10:00 AM – 3:30 PM . Exchange would move all unmatched market orders to the continuous session at the opening price.

Initial IPO returns in the United States increased between 2016 and 2020, with 2020 replacing 2013 as the best year for first-day gains over the past decade. In 2020, the average first-day gain after an IPO was 36 percent .

If there are a lot of orders (oversubscribed), the company will price the shares higher . Once the IPO is priced, the investment banks will allocate shares to investors, and the stock will start trading in the market for the public to buy and sell.