What is IPO and should one invest in any company at the time of IPO – Stock Market

The full form of IPO is Initial public offering in Hindi. This is the name of a process under which a private limited company includes its name in NSE- National Stock Exchange and BSE Bombay Stock Exchange. In simple Hindi it is called listing in the stock market. Through IPO, the company makes its shares available for purchase and sale in the stock market. Thus, through IPO, any private limited company makes its shares available for purchase to the general public for the first time.

Should one invest at the time of IPO or not?

Before buying shares of any company in the stock market, people check its record in the stock market, but at the time of IPO, no record of the company is available in the stock market. In such a situation, investing in any unknown company and buying its shares is definitely a risky task, but if you have complete information about the company, then this IPO becomes an opportunity for you, because it is believed that At the time of IPO, shares of any company are available at the lowest price.

Key points to keep in mind before investing in IPO

First of all get the basic information of the company. How old is the company and what business it is doing.
Find out what the future holds for the business the company is doing.
Find out how much total assets the company has.
How much business does the company do annually?
What are the company’s expenses?
How much debt does the company have?
How much net profit does the company make after paying all expenses and taxes etc.
Who is the director of the company, how much experience does he have and is he a successful businessman.

Lastly, try to find out whether the company deserves the price of its shares declared at the time of IPO. Many times companies set the price of their shares much higher than the actual price at the time of IPO. In such a situation, even if the company is good, people suffer losses. LIC’s IPO is the latest and biggest example of this.

Is IPO short term investment or long term?

IPO is used in both situations. Many people buy shares of the company on the opening date of IPO and sell them on the day of listing in the stock market. It is mostly seen that this type of investment gives a profit of 6 to 12% within just a week, but it is important to note that this does not always happen. Many times, at the time of listing in the stock market, the valuation of the company’s shares becomes less than the issue price of the IPO and remains low for a long time. Then the business of the company increases and due to that the share prices also increase. You must have heard many times in the news that a company has doubled or even more the money of its investors in one year. This calculation is done from the issue price of the IPO.

Overall, if you have prior knowledge about any company or you know how to make the horoscope of any company, then IPO can be a good means of earning for you, but if you are interested only by watching advertisements or following the news and information broadcast at the time of IPO. If you invest on the basis of advice etc. then it can be risky for you.

Leave a Comment