IPO Kya Hota Hai : IPO Type, Benefits, Process etc: Gain Profits in 2024

Introduction and Overview

In This Article we would cover What is IPO ( IPO Kya Hota Hai)

  • An IPO or Initial Public Offering is the process by which a privately held company, or a government-owned company, raises funds by offering shares to the public or new investors.
  • Actually companies issue IPO to get listed in the stock market. Once that company is listed in the stock market, investors can buy and sell shares of that company.
  • While coming up with the IPO, the company has to file its offer document with the market regulator Securities and Exchange Board of India (SEBI).
  • The offer document contains information about the promoters of the company, its financial details, plans of the company and the purpose of raising money, etc.

 

IPO Kya Hota hai
IPO Kya Hota hai

IPO Kya Hota Hai: Types of IPO

There are 2 types of IPO, their details are as follows-

1.Fix Price IPO

Under this, the company fixes the price of its shares, on the basis of which shares are offered to the investors. Thus the company hires a merchant banker, an entity that is paid to assess and deduct the risk level of the company. Merchant banker calculates the assets and liabilities of the company i.e. assesses the present value of the company and its future prospects. He thinks about compensating the investors in case of risk by observing the risk of investment. After a lot of research, it is decided that the price of each share should be fixed for the company to raise capital.

In this type of IPO, investors know the share price before the company goes public. They pay the full fixed price while subscribing to the IPO. The demand for securities is known after the closure of the issue.

 2.Book Building Offerings

             The price of an IPO is not decided by the company during the route through the IPO book building process. Investors wishing to buy shares have to bid within a stipulated time before the price is fixed. However, the bid is placed within a price band or ceiling of 20%, which is decided by the company. Floor price is considered to be the lowest price in the range while cap price is considered to be the highest price.

The company also needs to specify the number of shares it wants to sell. Final price depends on bids received from investors. In this type of IPO, the investors pay for the shares after allotment.

IPO Kya Hota Hai: Why Does Company Offer IPO

  •  IPO is a money making process. When a company offers an IPO, they are looking for money and they need money for the growth and expansion of their business, to repay loans, etc.
  • A company going public means that the company has achieved so much success that it is now ready to be listed on the stock exchange.
  • The market is becoming larger and more demanding, so a public company can offer more stock and it provides a better approach for acquisitions and mergers, as shares can be issued as part of the deal.

Process to Buy an IPO of a Company

  •  IPOs are not bought, but applications are made for them. When the allotment takes place, it is known whether you have got the shares or not. If you receive the shares, they are credited to your demat account with an interval of 2 or 3 days. After this you have to wait for the listing of shares in the stock market. After the listing of shares, you can sell them.
  • If you want to buy IPO, you can invest money in the IPO of the company whose IPO you want to buy by going to the IPO section of your Demat account.
  • The IPO i.e Initial Public Offering is open for subscription for 3 to 5 days. Within these three to five days, you can invest money by going to its IPO.
  • The initial public offering price band is determined by the company. As I have placed my company’s IPO 150 – 170, you can select it and apply for it at any price within 150 and 170.
  • If you invest in the IPO of a company, you buy a lot of it. For example, suppose there are 30 shares in 1 lot. You can invest money based on the number of lots you want to buy, but you can invest up to a maximum of two lac.

IPOs Allotment

  •  When you invest money in an IPO, you have to keep the same amount in your savings and trading account as you bid for. Actually that money remains blocked until you get the shares of the said company.
  • After this, based on the price for which the investor had bid, the company determines the issue price of the Initial Public Offering (IPO) and at the same price gives shares to its investors in their demat account.
  • After this the IPO is listed in the stock exchange and the price at which the IPO is listed is called the IPO price. 1 or 2 before the shares are listed in the stock market, the shares come in the demat account of the investors.

IPO Buying Rules and Procedure

  •  You should have all the relevant information about the company which issuing the IPO
  • After this, get information about the date and time of issue of IPO.
  • Prepare all the necessary documents for the shares to be bought under the IPO.
  • Collect funds to buy IPO ie arrange money.
  • Keep your demat account ready for purchasing IPO shares.
  • Then register on the IPO website.
  • Get information about how many shares it is mandatory to buy in IPO.
  • Get IPO price information.
  • Register to buy IPO.
  • Select IPO.
  • Complete the IPO process through online medium.
  • to buy the IPO, Pay the price
  • After this you have to submit the IPO form.
  • Now the IPO bought by you will be credited to your account.
  • On receiving the allotment, you will receive the allotment note within 06 six days of completion of the IPO process, which is credited to your demat account
  • After successfully completing all these steps, the investor has to wait for the shares to be listed in the stock market. This is generally done within a week i.e. 7 days of finalization of shares.
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IPOs Benefits
  1. Quick Work Opportunity

An initial public offering is when shares of a company are rolled out to public investors for the first time. You get the right opportunity to enter your position in the initial days. In Short Time Period IPOs can be helpful to make quick and easy profits. You can hold on to your position for a longer period as well.

  1. Long Term Benefits

The main advantage of investing in IPOs that has attracted investors over the long term is that investing in IPOs can help you earn handsome returns over a long period of time. IPO investment is a type of equity investment and can be leveraged to meet long-term goals such as retirement planning.

  1. Price Transparency

Complete information regarding pricing of equity shares in the IPO is publicly available in the browser filed by the company. This way you get access to the same data as some of the Great Investors. However, this changes in the post-IPO situation. The post-IPO cost depends on regional performance and changes in investor interest.

  1. Small Investments may Provide Great Returns

When a company offers to invest in equity shares, you get the lowest price in IPO but the stock price increases at the time of listing and gives you more profit in working time.

Risks Involved in Investing in IPOs
  • The biggest risk of investing in an IPO is that there is no guarantee of getting the shares. If the shares are subscription based, any number of persons can apply for them. So the company will allot shares on a proportionate basis and if you are a small time investor and many individuals are involved, India’s Pre-IPO share system will hardly get you any shares.
  • You get less value from your investment when you buy Pre IPO shares. Pre IPO share price is decided only after listing and there are many cases where the listing price turns out to be lower than the purchase price.
  • External influences can affect the price especially when the companies are running their business according to the government law which can change according to the current political situation of the country.
Some Latest Updates: More Profit in Small Companies

At present, more than 5000 companies are listed in the Indian stock market. Out of this, almost all the companies IPO has been listed. Statistics shows that during this period there have been some companies whose IPO has received hundreds of times the subscription. There have been hundreds of such companies which raised less money, but their shares have made investors rich, on the other hand there have also been some companies which have also succeeded in drowning investors’ money.

Analysis shows that if you invest money in the shares of good sector companies carefully, then you can get a lot of profit in just a week. After bringing it, company has to get the shares listed on the stock exchange within 6 days.

Top Profitable IPOs this year
Company Rate Enlisted Benefit Subscription
Idea forge 672 1295 93% 106 Times
Utkarsh Small 25 48 92% 111  Times
Netweb tech 500 910 82% 71    Times
Saint 265 420 59% 71    Times

 

Listed Top Stocks Giving Record Gains
Company Rate Enlisted Benefit Subscription
Sigachi 163 603 270% 102 Times
Paras Defense 175 498 185% 304 Times
Religare 185 521 182% 160 Times
Vishal Retail 270 752 178% 67  Times

 

Companies Raising More Money Who Gave Losses

 Shares of companies which raised a lot of money have given losses. LIC, which has launched the biggest IPO till date, lost almost 8% at the time of listing. It had collected more than 21 thousand crores.

Paytm’s parent company One97 Communication raised 18300 crores. It gave 28 per cent loss at the time of listing. The shares of both these companies have never reached the IPO price and even today they are giving losses to the investors.

Final Words on IPO

Stock market is booming, At present the market is in a boom. This is helping companies to raise capital. The boom of the market will remain for many years and in such a situation the companies will also raise a lot of capital. Some IPOs Some give immediate benefits and some give over a long period of time. In such a situation, it is a good opportunity for every investor to invest. It is advise to all that before investing in share market, you should go through all the details of such company because market is uncertain.

Frequently Asked Question (FAQ)

1.What is Time Limit for IPO?

An IPO remains open 3 to 10 working days. Stock exchanges accept membership applications between 10:00 AM to 5:00 PM (Except Holiday)

2.Can We sell IPO Anytime?

During the Trading session or Time, you can sell.

3.What is FPO?

When the company has to issue its share for the first time, then company issue IPO

After successfully listed with stock exchange, now second time when company issue its share, it is called FPO (Follow on Public Offer)

4.Which is Better IPO or FPO?

Although During the IPO Launch We all have to understand the relevant details of company because company is first time launching its share, so it is pretty risky to go with IPO. On the other hand FPO Considered to be safe because company already listed with stock exchange, and we know the previous performance.

Friends, hope I have explained all the relevant details of IPO Kya Hota Hai (What is IPO) . How did you like our post, Please Tell us the by commenting in the comment box. if you want to ask any question kindly feel free to ask in the comment box. We give our 100 percent.

 

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