There will be several IPOs this year
As much as companies try to launch IPOs, many new investors become interested in investing in them, and go with the flow
- News18.com
- Last updated:04 February 2022, 15:46 IST
- FOLLOW US ON:
India has seen a huge surge in companies over the past year launching their initial public offerings (IPOs) and seeing unprecedented response. After witnessing the boom and record investment for a year, dozens of startups and businesses are lining up on Dalal Street to be listed there. So far, more than 30 IPOs are waiting for a nod from the Securities and Exchange Board of India and some companies are under the supervision of the market regulator. The IPO of the LIC, touted to be the largest in India to date, is also expected soon, the government has said.
As much as companies try to run IPOs, many new investors become interested in investing in them, going with the flow. However, there are a few things that young investors should keep in mind before investing in IPOs this year.
These are the most important things to remember before investing in IPOs
- Run background checks: It is always important to read the company’s past before investing in stocks, especially an IPO. Before investing, always check the company’s financial history and understand its growth potential. This will also give some idea of why the relevant company is driving the IPO.
- Read the Red Herring Prospectus: Before making a public offer, companies are required to submit a Draft Red Herring Prospectus (DHRP) to market regulator Sebi. Here, the company details how it plans to use the proceeds from the IPO and also sheds light on what the risks could be.
- How the proceeds are used: If the proceeds are used to pay off debts of the company in full, it is not advisable to invest in the IPO. However, if the company uses some of it for general corporate purposes or to raise more funds, investors can rest assured that there is growth prospects.
- Check the company’s valuations: Before investing in your IPO of choice, review the company’s valuations. The bid price may be undervalued, overvalued or justifiably valued, depending on the parameters of the industry. It is also important to monitor the company’s financial performance over the past few years. If it performs well, investing in that IPO can be a good choice.
- Investor intentions: It is always important to understand what you want from the IPO as an investor. If your investment horizon is looking for quick gains and the stock won’t hold for long, you should choose the IPO accordingly, depending on market sentiment. You can also choose to go for a long-term profit IPO depending on how the company settles with its strategies. You shouldn’t go with the flow just because an offer is being hyped.
Read all the Latest News, Breaking News and Coronavirus News here.