Initial public offering is the process by which a private
company can go public by sale of its stocks to general public. It could be a
new, young company or an old company which decides to be listed on an exchange
and hence goes public.
Companies
can raise equity capital through IPO’s by issuing new shares to the public.
Once issuing the shares to public those companies called public limited
campiness.
Example: XYZ textiles pvt ltd company and they making
profits well but now they want to expand their business in other states, now
they need capital to expand so they decided to go for IPO (initial public
offering) to dilute the ownership into public. Now the company has value of 10
lacks and they divided into no.of shares using face value.
X
No of shares = 1000000 / 10
No
of shares =100000
Each
share value = 10 rs.
XYZ will issue the 50% of shares to the public means (50 k
of shares), you will collect 5 lacks from the public and will use that money to
your company expansion. Check below image how ipo thought will come to company.
IPO Thought Process:
Who
can invest: everybody like Me, You, Your father, Your GF
or BF (as the case might be) your neighbour, your maid, or any other you know.
What kind of returns we can expect in the market, here we
can see below image of last one year ipo’s releases and its performance.
Here we have the list of good returns from Ipo’s for understanding.
If you can observe above image, you can see the returns
from the Ipo’s. Everywhere profit is there means risk also is there, sometime
the listing price will be less than offer price, means you will lose your money
form the market .when you are investing in ipo’s also make sure you need to
look the fundamentals of company and goodwill in the market.
I think you have some queries about ipo’s investment like
how much we need to invest and how we can buy these ipo’s in the market.
Ipo’s always release in slots wise so we need to buy it in
slots, (i.e. 1 slot = approx. 15000), as per recent releases of ipo’s the
investment range from 14000-15000 per slot.
Where can I apply: if you want to buy ipo’s
you should have demat account, you will get service from the brokers or you can
apply from internet banking also .in your net banking we have option ASBA option , there you can have the
online application form filling for ipo’s.
Here you can see the below image for applying ipo’s through
net banking, I consider my SBI bank for buying ipo’s but my demat with
different broker.
Through this process you can buy, once shares bought from the
market it’s will delivered to you DEMAT account and once ipo’s completed those
shares will register in exchange (NSE, BSE) for trading into the market.
Once stocks hit into market you can see the price movements
and there you can sell otherwise you can hold till you want. You can see below
image.
Isn’t it so simple and realistic to learn or earn.
Thank you for your time.
Apologies for any typos.
