Everyone who is a beginner in the stock market always wants to know how to buy IPO in India. In this article we are going to discuss how to buy an IPO. Initial public offering ( IPO) is an option to purchase stocks in a firm that is becoming public.
It is a common form of investing since it has the ability to multiply in a brief span of duration. Consider Equitas Small Finance Bank’s example. They were oversubscribed 3 – 4 times when the firm wanted to go public.
It indicates that there was approximately three fold the volume for stock auctioned by the firm. This is not surprising, as IPOs are a chance to raise a rapid profit.
Table of Contents
How to buy IPO in India?
Look for these details before checking how to buy IPO shares:
Analysis of IPO
Don’t directly invest in any IPO without taking proper information. Follow these steps before applying or making up your mind.
Read about Company & Management before checking how to invest in ipo in india:
When you hear about an IPO of any company the first step you need to take is to read about that company & its products. Always read the firm’s prospectus which will be available on Sebi’s website which is also known as Securities and Exchange Board of India.
Checkout the management people. Who is MD of the company & who is on the board of the company. Are they well-known in their industry? Checkout news about them.
Details about IPO’s Tentative Dates
When any IPO declares it’s listing they will also give tentative dates of regarding when it will open & close, Date of allotment, date of refund and the date of listing. It will help you to know the risk of the market. Let’s understand it with an example.
I hope you heard about SBI Cards. During their IPO everything was good there were no problems in the company & everything was perfect but nearly to their listing date stock market started falling. Everyone was assuming that it would be listed on a good premium but due to market trends the list happened on discount.
Size & Main Target About Investors
Check the details of the size of the IPO first so you can predict chances of getting an allotment. After that look at the IPO details how they have divided it. As some companies focus on Qualified Institutional Buyer & some on retail investors.
Most companies divide their IPO in three parts. One Portion for Qualified Institutional Buyer, Second Portion for Non institutional investor & the last one is for retail investors.
Balance Sheet & Previous Results
Take a look at the balance of the company & also try to find out the growth of the company in the last few years. This will help you to know if the company has debt. or how much profit they are making. Strong balance sheet makes the IPO more successful & profitable for investors.
Industry’s Future Growth
This thing you need to predict based on your experience. Like if it is an IT company then you know that in future we need more technology so you can invest for the long term. Whereas if it is some kind of traditional business which doesn’t have many opportunities for growth then you must not invest in it for the long term.
Share Holding Pattern
Checkout the share holding pattern after this IPO that shows how much remaining shares are left with the promoter firm if it is more than 75% of the total shares of the company. Please be conscious while investing in such an IPO as there will be more shares that will come into the market in near future.
News
Checkout the views of institutional firms & news sources. What are their views about the IPO. Mostly firms give their opinion about the IPO before the opening date or on the opening date. So consider them as well while making your mind about the IPO.
Subscription
Don’t invest in any IPO on the first day of it’s opening date. Track IPO subscription on NSE or BSE website on the first day & if there isn’t much subscription then wait for the second day as well.
If the response of the IPO on the first & second day is not good then don’t apply for it. Always try to apply on the second or third day depending on the response.
After checkout all these points make your mind about an IPO.
Funds
After making your mind you need to arrange the funds for this IPO. The first & best option for it is to invest only if you have your own money. People sometimes take money from others or loan & invest which is not a good option as if you go wrong & how can you repay them.
There are some risks that always remain in the market even after analyzing the IPO. So there are possibilities of loss in any IPO.
How to Buy shares from an IPO?
Follow these steps of how to buy ipo shares in india:
- Step 1:Pick up an actual online application from a brokerage, distributor, or bank branch.
- Step 2: Fill out the form with your basic and financial information, including bank and demat account information.
- Step 3: Enter the entire amount of your investment.
- Step 4: The shares will be distributed within 10 days after the closing date (of the offer)
- Now you know all the step regarding how to buy IPO
How to know the premium for the forthcoming IPO?
Check on the link below and search the name of ipo. You will get a daily GMP update for all issues which are currently open.
Bidding for Allotment
After arranging the funds you can apply in the IPO from your demat account. If you don’t have a demat cum trading account you can apply for it by clicking here.
IPO Refund
The Refund of money which was blocked after applying in an IPO will come mostly on the next day on the basis of allotment.
Investment or Listing gain
Make your mind while applying for the IPO regarding the period of investing. If you are looking for listing gain only then keep a strict stop loss on the listing date. Keep the stop loss trailing till the time share is going up.
Summary
IPOs come every month mostly or within 2-3 months of new companies. Don’t run behind every IPO as there are possibilities that you end up making a loss. Always talk to your financial adviser before making any investment.
In the above post we have given the information only regarding how to purchase ipo? We are not giving advice to apply for any IPO. Always consider risk & other factors about any IPO to minimize the risk.
Other Interesting Blog Related to How to buy an ipo in india:
IPO allotment Process and timing
FAQ About How to Invest in IPO in India?
When Share gets credited after IPO?
In most cases shares get credited 1 day after the allotment date.
Name of some upcoming IPOs
1. Kalyan Jewellers 2. Burger king 3. Mrs. Bectors Food Specialities Ltd 4. RailTel Limited 5. LIC India
How much is the maximum amount a retail investor can invest in an IPO?
The maximum amount a retail investor can invest in an IPO is around 2 Lakh rupees.
How to increase the chance of getting an IPO?
Try to apply from 3-4 accounts.Not from the same name but from your family accounts. So might be one of the accounts.
Which IPO got the Highest listing gain in the last 10 years?
sigachi industries ipo got the highest listing gain in the last 10 years. The bid price was INR 163 & it was listed at INR 598 per share.
