What is an IPO: Why to Invest and Is IPO Always Profitable?
To start investing in IPOs you must have three online accounts that are – demat account, trading account and trading account. To open a trading and demat account you have to choose a registered broker and for a bank account contact your bank to provide the net banking or connect your bank account with UPI to connect with your broker.
What is an IPO?
IPO or Initial Public Offering is the process of offering equity shares to the public first time in the primary market. A company looking to raise funds by diluting its equity shares or its existing promoters or shareholders looking to sell some of their stakes to the public go for the IPO.
The entire IPO procure is conducted with the help of investment bankers and a register of the companies to organize everything from deciding the IPO issue price to the allotment and transfer of shares to investors. After listing, whenever any company issue any more equity shares, it is called the FPO or Follow On Public Offer, in which equity shares can be issued to existing or new shareholders.
Why Invest or Apply in IPO?
Investing in IPOs could be highly profitable if you choose the right company and get the allotment of shares in the IPO. Yes, if you get the allotment and the IPO is listed at a high premium over the issue price you can get the highest returns within a few days (in 1 week).
Investing in the secondary market or already listed company will take time to give you that much of a return or there is a risk of going down the value below your cost price. But in IPOs, if you get advice from the market expert to invest only if there are chances of profitability then apply.
Is IPO Always Profitable or a Good Investment?
It is not necessary IPO profitable all the time. But you can say investing in every company’s IPO would be not profitable. Only companies having the potential to list at a premium or the IPO launched at a very discounted price compared to their listed peers are good for the investment.
A good IPO can give you a return within a few days, while a bad company will not give you a return even for many years. Hence, choosing the right company while applying for the IPO is a very important factor in making your investment profitable. The sentiment of the investors in the secondary market also matters a lot, as a positive sentiment gets a good response in IPOs compared to a negative sentiment.
How to Invest or Apply in IPO?
To invest or apply in the IPO you must have a trading and demat account with the registered broking company providing the investing and trading facility in the stock market. If you don’t have any one or both of them you can apply to open a demat account and trading account online.
Once you have opened the demat and trading account you will get the online platform with a login password to apply in the IPOs or buy and sell in the stocks of any listed company in India.
Also Read: IPOs Launching this Week: Latest IPO & Upcoming IPO List 2024
Disclaimer: The views and investment tips expressed by investment experts here are their own and not those of the website or its management. And the movement of recommended stocks are subject to the movement of the main index or entire stock market. Hence, there is risk investing in the stock market, it is advised users to check with certified experts before taking any investment decisions.
