Investing in IPO: Things to Keep in Mind

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Investing in IPO: Things to Keep in Mind

24 Jul 2021
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2020 was marked with turbulent swings on the Global Indices, with almost every index breaching the lows of 2014-15. We witnessed an absolute roller coaster of emotions both from the investing community as well as the trading community. A year that started with the all-time highs of Nifty on 18th January 2020 also saw 6-year lows at 7500 levels. And then came the revival story which has not been any less than India winning the 1983 Cricket world cup. The Great Covid Fall triggered an immediate bull run which has left lots of analysts dizzy, but every global index recovered almost in no time.

The mesmerizing recovery in the equities was coupled with a set of companies trying their luck listing on Dalal Street. Barring Antony Waste IPO, every other IPO witnessed insane subscription from all the categories. Mrs. Bectors Food, Mazagaon Dock, Burger King, and Happiest Minds all witnessed a subscription over 100 times the issue size. The addition of 4.9 million Demat accounts or retail investors adding to the subscriptions is a number to behold!

Apart from SBI Cards (listed on 5 March), Angel Broking, and UTI AMC every other company yielded positive listing gains and as high as 5 companies noted 75% or more listing day gains. The average 15% returns on listing from 2015-19 jumped up to 41% creating a buzz among all sections of society. These numbers are not to be scoffed at.

Investing in every IPO is becoming more common for retail investors, big and small, but company fundamentals and studying RHP is still an important aspect that must be noted by these retailers.

As a new-age investor and a millennial new to the markets, getting carried away with the numbers is so easy. But no matter how attractive the world of the share market appears; it always comes with a tinge of caution. As it should. It appears a lucrative deal and beginner’s luck will make it look like a safe haven but then comes a mega block turning the tide over and completely changing the game.

Discussing the IPO frenzy, 2021 is an exciting year for me to learn about the markets, as the listing of some really intriguing set of businesses has been making the news. When Nifty is knocking new all-time highs and brands like Zomato, Paytm and LIC are hitting Dalal street, what better place to be but in the eye of the storm.

By Prateek Chitte
PGPM – BL, Class of 2022

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