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  • Category: Investments

    What is an IPO in the context of investing?


    Have a query about IPO? Searching for its meaning in the context of investments? Check out this Ask Expert page for responses to your queries.

    From time to time advertisements appear in the newspapers regarding the issue of IPOs by certain companies. What is an IPO in the context of investing? What are the key factors which should be kept in mind and precautions to be taken prior to investing in IPOs?
    Experts: do respond.
  • #138868
    IPOs are released the first time when the company enters into the market. So their public initial offer is listed as IPO. And they may attract more people into the investment. Before investing into the IPO make sure you pay attention to one of the following.

    1. Read the risk document carefully. Know where they are from and how they are projecting ahead.
    2. Check when the lock up period is ending. And when the safe investment period begins.
    3. Find out the strong brokers that are backing the company.
    4. Be skeptical on the company policies and the board members. Think before you invest into the company. If you are unsure, don't invest into IPO.
    5. Do the objective research and find out where the company stands for next year or so.

    These are the tips to keep in mind while investing into the IPO.

  • #138878
    IPO means Initial Public Offer. This is when a company goes public by offering its shares to the public for the first time .

    An IPO , in the case of a well established and profit making company is usually seen as a welcome event by investors.

    What are the key factors and precautions which should be kept in mind (in the case of an IPO?)
    Investors have to check for and know about who are the key people and promoters of the company. Does it belong to a group? If so how the group is doing in the market? A company with well experienced directors and promoters and with professional management is worth investing, if other parameters are also okay.

    What is the authorized capital, what is the present issue capital?
    The other important thing is how much will the promoters keep with them. If the promoters are diluting their stake to the maximum extent and keeping only minimum shares to keep their hold, then one should be careful, as the original people are trying to get out of the company for some reason.
    Who has underwritten the issue? Who are bankers to the issue? Is it a reputed firm or a new entity? If they are all reputed and established entities, then one can invest in the IPO with more confidence.

    If the company is new, yet to show results, if the bankers and underwriters are all small and new, then it is better to take less risk only.

  • #138909
    IPO stands for Initial Public Offer. It is a source of collecting money from the public (investors) for the first time in the market, to fund the company's projects. In return, the company gives company's shares to the investors.

    Investment in IPOs can make an investor unbelievably rich with minimum investment over time. However, retail and small investors don't have the ways/information to evaluate an IPO. Some of them go by the rating of experts, which may not be fully reliable. So, retail investors should either avoid IPO, or invest less than 10% of total investment in IPOs.

    Caution: Explosive. Handle with care.

  • #138953
    First of all understand what is an IPO and why company lunch IPO.
    As you know IPO is Initial Public offer,
    Suppose a company XYZ limited need some money to extend their business or organisation. They can get money from various sources like bank loan, mutual fund house, venture capital and they can come to the public directly.
    Taking money from direct public is known as the IPO.
    It means as a retail investor you give some money ( buy some shares of that company) and you become the share holder of that company.
    Now come to the investor part-
    Whether it is a good investment or not?
    It all depend upon the performance of company, product or service of company and the good will and future of company.
    For example in 2016 lots many company lunched their IPO like RBL bank, L&T infotech, Ujjian financial services, Mahanagar gas etc who has given almost 20% profit on the day of listing.

    How to apply for an IPO-
    You need a demat account and a savings bank account.
    You can apply either online through your bank web site or can apply offline, by filling a form , just your name, contact details, bank account number, ifsc code etc.
    They have set a minimum price band and minimum lot size which almost come with in RS7000-12000 or littel bit higher.
    After end of their subscription with in 5-7 days it get listed either in NSE or BSE and you can sell if you get a good profit or can hold for long term profit to enjoy the dividends and bonus.

  • #139589
    For a novice in share market, IPO is Initial Public Offering which means first time distribution of share of a particular company. You need to buy certain pre-fixed units of IPO during its bid issue open duration. Not all the persons who applied for IPO gets shares but it based on certain draw which might decide the allotment of shares. If you lucky, you will get the shares.

    I would advice you to hold the shares of IPO which are allotted to you if the company has given good returns for atleast two years. You will get good returns within a three months of hold of that shares. For long term profits, you need to invest for more than four years.

    Paresh B. Gujarati


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