An IPO can also be referred to as an Initial Public Offering, which refers to the offering of shares of stocks to the public. The upcoming IPOs are a good investment avenue, but they are always associated with certain risks that are not easily grasped by everyone. Here are 5 essential tips for investing in IPOs in India as a retail investor:
1. Research Well Before Applying
It is recommended that you gather a great deal of information about the company and the industry it is in, any firms who operate in the same business, and its financial condition. Suppose you want to invest in the upcoming Hyundai IPO, then you must scan every detail of the company.
The rationalisation for investing has to come from the prospectus, thorough historical studies on how well the company has done financially before and background information of the company for ones to make their own decision about whether it is worth investing in depending on your own willingness to take this kind of risk. Be wary of one-in-a-million pulls or-never-happens, clutching at delusions of grandeur. When giving forecasts of IPO gains, base them on today’s market conditions and current trends in the market.
2. Apply through Trusted Brokers
Make a demat account with those brokers who are offering flawless application facility for IPOs related issues. Select brokers that facilitate quick turnover for subsequent processes regulating bidding, allotment, listing and others. There should be adequate balance in the account at the time of applying so as to ensure that the application is not turned down.
Leading brokers also offer research notes on potential floats On a more detailed level, leading brokers also give research notes on potential floats.
3. Utilise Technology to Apply
Replace the manual filing of forms by participating in the UPI bidding process through brokers to participate in IPOs through Net banking. While it may vary from broker to broker, most technologically fluent brokers are capable of offering user-friendly platforms for bidding.
It makes sense to employ UPI bidding quickly as it speeds up fund blocks, enhances the likelihood of allotment and is convenient. In fact, you can even withdraw bids if you are unconvinced later on about the bids that you had placed.
4. Avoid Overbidding
Determine maximum investment quantity you want to bid based on the lot size and your capability so as not to engage in random bidding aiming for greater allocation. Do not have the mentality of rushing to every other IPO in a hurry when they are greedy. Performance monitoring after listing helps in avoiding the purchase of stocks of organisations that would in the future become a sorry investment.
Use remainder as capital for reinvestment, ensure that firms have good financial health by repeating the use of leftover money to buy existing stocks.
5. To Sell or Hold after the listing of Shares?
Companies that offer their securities in IPOs get themselves listed in the stock exchange normally in 6 working days after bidding has been closed. In the case of a given player, he has to decide whether to hold for the long term or to sell at the first instance depending on the price band.
Any ordinary good IPOs tend to rise 35-50% than the issue price in order to deliver listing gains. In the same way, if the price is already too high, sell it in part and retain the rest for future profits. If underpriced, one should hold on to it as better financial returns may provide superior long term gains.
Conclusion
IPO investing necessitates thoughtful analysis and methodical preparation. Retail investors can navigate the upcoming IPO 2024 landscape more skilfully by adhering to these five essential tips: conducting extensive research, using reputable brokers, utilising technology, avoiding overbidding, and making well-informed decisions after listing.
Recall that initial public offerings (IPOs) entail risks in addition to potential gains. Invest sensibly, within your means, and in line with your financial objectives at all times.
