You must have heard many people saying that we invested money in this company’s IPO and our money doubled in a few days. So does investing in such an IPO double the money? How does it happen brother? How can you invest in IPO? Do some people also suffer losses by investing in IPO? You will understand the entire game of IPO from this blog.If you’re curious about IPOs, what are IPOs and how can we invest in them, this blog will answer all your questions.
What Is IPO
The full form of IPO is Initial Public Offering. There is a company XYZ. it has to expand its business and make debt payments, for that the company needs funds like 1000 Cr, 2000 Cr, for that the company has to list on the stock exchange.it can be NSE either BSE one or both After that the company can take money from the public.
Who Invest In IPO
Qualified Institutional Buyers 50% Reserved for them Those with significant wealth. like Mutual Funds and Insurance Companies. Non-Institutional Investors 15% reserved them People with significant wealth can invest. Retail Investors 35% Retail means those with less than ₹2 lakh. If a company offer 100% of its shares, that 35% is reserved for retail investors.
If any IPO is oversubscribed 2x 3x 5x because when the demand for the stock is high. then the chances of getting it are less. IPO Allotment system works on computer based lottery methods.
Most of the people invest in IPO because one of them is speculation, one is investment. Speculation, this IPO is coming, you invested your money on 11th, after 2 days on 13th you will get to know whether you got the IPO or not, that IPO gets listed in the next 5 days. Speculator, profit is booked immediately after listing
Some people also invest money in IPO for long term. As they know that we have bought the shares of the company at minimum rate and there will be more growth in future. It is not necessary that your money will get double from listing in IPO. You can earn multiple returns in long term by holding it.
Before investing in IPO you also have to check a grey market premium. Which will give you an idea of how much return this IPO can give you. But you cannot invest in IPO by depending on this because sometimes it can prove to be wrong.
