What is IPO?
(IPO), “First Public Offering” When a company releases its normal stock or its shares to the public for the first time, it is called a “public offering” or IPO. IPO are mainly issued by small companies who want to further their business or need the support of their company.
How did the IPO come out?
An IPO consists of one or more investment banks (investment banks) per underwriter (Hamidar). The same underwriter goes to the investors with an offer to sell the shares.
To pull off a large IPO “for example 10000-15000 crores of funding” is through an organization of the investment bank, which is headed by a large investment bank. On the sale of shares, the Hamidar gets (aadhat) commission which is based on the value of the shares sold, usually the underwriter who sells the most shares gets the highest commission. (6-8%)
IPOs usually work with more than one law firm (law firm), instead of a variety of legal requirements. 1. Magic Circle of London 2. White Shoe Firm.
lot size in ipo
According to SEBI, (Securities and Exchange Board of India) IPO a retail investor is entitled to bid up to Rs 2 lakh. And for this it is necessary to have a fixed bid. Meaning if a lot of an IPO is of 14 shares, then at least 14 shares have to be bid.
There are many different types of IPO options.
– Dutch auction
– firm commitment
– Bought deal
– Self distribution of stock
Why is IPO risky?
IPO can be a risky investment because it is difficult for investors to predict that the market will be bigger in the next week as well as most of the IPOs are from those company which is from such a temporary growth spurt. Therefore, there is a reluctance to increase or decrease the value in future.
How to invest in IPO?
The issuing company of the IPO opens the IPO for its investors for 3-10 days, and during this period any investor can register in the IPO on the company’s site or through his broker. Any company keeps its IPO issuance period for 3 days, then some keep more than 3 days.
Now if IPO is a fixed price issue then you have to apply for IPO at the same price or if IPO is book building issue then you have to bid.
When an IPO opening closes, the company makes allotment. In this process, as much as the percentage of the company that takes out the IPO, the same percentage is allotted to all the investors. Or after the IPO is allotted to the investors, the shares are listed on the stock exchange.
Stock buying and selling process
In IPO you can buy shares (lots) but you cannot sell them until the shares are listed on the stock market, once the shares are listed, money and shares are exchanged between the two investors. live.
Once the stock is listed, you can buy and sell shares as per the instructions of stock market timing.
Advantages of IPO
. Through IPO, it is estimated that the company is giving very good performance in the initial days. Or the company is going to work on more new projects by collecting funds or wants to expand its business.
. Many types of payments can be made with the help of shares. Cash transactions can be got rid of
. Through IPO, the market cap of the company increases, due to which the size of the company also increases or due to this, the company has to hire many new employees on the help of which people get jobs.
. When the price of the shares increases, the net worth of the investors also increases if the promoters own the shares.
Disadvantages of IPO
. The company has to work by following the rules of SEBI (Securities and Exchange Board of India).
. All the information of the company is public I fail caste.
. The owner of the company cannot sell his shares immediately after the launch of the IPO, as doing so leads to a fall in the price of the shares.
Whenever the IPO of a company comes, the public is forced to think that it can give good profit in a short time. And because of this thinking, many times investors have to face huge losses.
Therefore, if you are going to invest in a company, then do a good search about that company and if you like the company’s business model, then invest according to your pocket, then it will prove to be good for you in the future.