The difference between the issue price of an A company's first offer of its shares to the public, after which the shares are listed on a stock exchange and can be bought or sold by any investor. Read the full meaning of IPO share and its price on the exchange on the day it first lists, expressed as a percentage of the issue price, is called the listing gain. It is a paper profit or loss, and it remains unrealised until the share is sold.
The formula is (listing price − issue price) ÷ issue price × 100. Market websites such as IPOGyani use this definition and it is not an official one from SEBI is the statutory regulator of India's securities market, with the legal duty to protect investors and to promote and regulate that market. Read the full meaning of SEBI, A regulated electronic marketplace in Mumbai where buyers and sellers trade shares and other securities at publicly visible prices. Read the full meaning of NSE (National Stock Exchange) or BSE.
A negative figure is an immediate paper loss for the allottees. The price used is commonly the opening price, while some studies, such as Prime Database's, use the closing price.
Listing day auction, price bands and the formula
Under SEBI's T+3 rule, an IPO is listed within 3 working days of the issue closing. On listing day, the exchanges run a special call auction from 9:00 to 10:00 am, and this auction sets the opening price.
A first day price band of 5% applies after the auction for issues up to Rs 250 crore, and a wider band applies for larger issues. SME IPOs on NSE Emerge have a cap of 90% above the issue price.
At an issue price of Rs 100, an opening price of Rs 120 is a gain of 20% and Rs 90 is a loss of 10%.
Listing gain vs return since listing and tax on early sales
Retail investors have no lock-in on their allotted shares, so they can sell on the day of listing. A sale within 12 months attracts short-term capital gains tax at 20% under the Income-tax Act, 2025 (in force from 1 April 2026, replacing the 1961 Act), where securities transaction tax is paid.
Listing gain is different from the return since listing, which is measured from the issue price to the current market price after some time has passed.
Published averages also differ from one tracker to another, as some measure the opening price and some the closing price, and some count only mainboard IPOs while others include SME IPOs. Two figures for same period can therefore both be correct.