WHAT IS IPO

IPO

An unlisted company (A company which is not listed on the stock exchange) announces initial public offering (IPO) when it decides to raise funds through sale of securities or shares for the first time to the public. In other words, IPO is the selling of securities to the public in the primary market. A primary market deals with new securities being issued for the first time. After listing on the stock exchange, the company becomes a publicly-traded company and the shares of the firm can be traded freely in the open market.

The company which issues shares to the public is referred to as the issuer. There are two common types of IPO.

Fixed Price Offering

Fixed Price IPO can be referred to as the issue price that some companies set for the initial sale of their shares.

Book Building Offering

In the case of book building, the company initiating an IPO offers a 20% price band on the stocks to the investors. The interested investors bid on the shares before the final price is decided.

IPO is used by small and medium enterprises, startups and other new companies to expand, improve their existing business. An IPO is a way for companies to acquire fresh capital, which in turn can be used to finance research, fund capital expenditure, reduce debt and explore other opportunities. An IPO will also bring in transparency into affairs of the company since it will be required to inform financial numbers and other market-related developments on time to the stock exchanges. The company's investment in various equity and bond instruments will come under greater scrutiny after it gets listed. IPO of any company brings great deal of attention and credibility. Analysts around the world report on investment decisions of the clients.

Investing in an IPO:

Investors betting on an IPO can earn handsome returns if they are wise and have some expertise. The investors can form a choice by going through the prospectus of the companies initiating IPO. They need to go through the IPO prospectus carefully to form an informed idea about the company’s business plan and its purpose for raising stocks in the market. However, one must be watchful and have a clear understanding of analysing financial metrics in order to identify the opportunities.

IPO NEWS

Peepul Capital-owned Medall Diagnostics plans to go for an IPO in 4 years
Medall's revenue, approximately Rs 400 crore at present, is estimated to increase to Rs 1,000 crore in three to four years| January 25, 2021, Monday
Indian Railway Finance Corporation IPO subscribed 3.49 times on final day
The initial public offer of Indian Railway Finance Corporation Limited was subscribed 3.49 times on the final day of bidding| January 20, 2021, Wednesday
Indigo Paints IPO opens: Trading strategies for other paint stocks
The recent reversal in paint stocks may see aggravated buying momentum after conquering significant resistances| January 20, 2021, Wednesday
Indigo Paints IPO opens for subscription today: Analysts give thumbs up
Indigo Paints is the fastest-growing paints company in India in terms of revenues, in a highly oligopolistic paint market.| January 20, 2021, Wednesday
IRFC IPO opened today; should you subscribe? Risk and reward explained here
Should you subscribe? Likhita Chepa, Senior Research Analyst at CapitalVia Global Research and Nirali Shah, Senior Research ...| January 18, 2021, Monday
IRCTC, Texrail, RITES: IRFC IPO may spark rally in railway-related stocks
Railway-related stocks such as IRCTC and RITES may see a sharp surge once significant resistances are breached| January 18, 2021, Monday
Sensex ends at day's low, sinks 470 pts; Nifty below 14,300; metals crack
Stock market updates: The S&P BSE Sensex hit an intra-day low of 48,404 today| January 18, 2021, Monday
IRFC IPO: Six reasons why you should subscribe to the issue
Investors can apply for IRFC's IPO in lots of 575 shares, and in multiples thereof| January 18, 2021, Monday
Indigo Paints IPO to open on Jan 20; price band fixed at Rs 1,488-1,490
The IPO comprises fresh issuance of stocks aggregating to Rs 300 crore and an offer-for-sale of up to 58,40,000 equity shares| January 14, 2021, Thursday
Warburg ups stake in IPO-bound mortgage lender Home First Finance to 30.62%
Private equity major Warburg Pincus on Thursday said it has increased its stake in IPO-bound mortgage lender Home First Finance ...| January 14, 2021, Thursday