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The IPO price and listing price are often different because they are decided in two completely different ways :
The IPO price is decided by the company and underwriters and calculated it based on company’s valuation, financial performance, industry conditions, feedback from institutional investors, This price is set before investors start bidding. So, the IPO price reflects what the company thinks it is worth.
After allotment, when the stock is about to start trading, buyers and sellers place their orders in the pre-open session. Stock exchange (NSE/BSE) matches these orders and finds the price where most shares can trade. This becomes the listing price. So, the listing price reflects what the market thinks the company is worth.
These two prices differ because Investor demand may change after the IPO closes. New information, news, or sentiment may emerge, market conditions may improve or worsen. Actual demand on listing day may be higher or lower than expected.
