The full name of the term IPO is Initial Public Offering. IPO is a process followed by those private companies who want to introduce themselves publicly by selling or issuing the shares for the first time in the stock market. The stock exchange does this whole process. For both new and old companies, IPOs are open.
Introduction About IPO
For a company’s growth and expansion, IPO is the best path. The main motive of issuing an IPO is to raise capital for the company with the help of public funds by giving the shares for them. In the stock market, this is called the first general invitation; hence, it is called an IPO (Initial Public offering). Once an investor buys the shares of any company, he becomes part of the ownership of that particular company based on the shares’ value. Hence, IPO comes with an excellent opportunity for most investors, but the price may also fall, which may increase the chances of loss. For instance, you can watch the LIC IPO. Still, if you properly analyze the company before applying for an IPO, you can minimize loss. For analysis, you must take the guidance of a well-experienced mentor, and for this, you must visit at Stock Market Institute In Delhi.
The Process of Issuing IPO in India
After knowing what is IPO now, it is essential to see the process of issuing an IPO in India.
- In India, issuing an IPO for the common public is not difficult. Any company can give it by following some simple steps mentioned below.
- For the Indian stock market, a regulator protects the rights of every investor and company, and that is the SEBI (Security Board Exchange of India). And if any company want to register its share or IPO for the first time, it is mandatory to register with SEBI.
- At the time of registration with SEBI, a company must submit all the necessary documents asked by SEBI. By watching papers, SEBI must be convinced to issue the IPO.
- While SEBI evaluates the application, prospects are mandatory to prepare by the company by stating that the approval from SEBI is pending.
- Once a company gets approval to issue an IPO from SEBI, the company must determine the share price of each share. The company also needs to disclose the total number of claims issued to the common public.
- Between two types of IPO, issues company need to make a decision.
- One is fixed price IPO, where the company must decide the price of IPO shares in advance.
- And Another is book building IPO, where the company needs different price ranges, and for every investor, there is a bid that can be set in a particular price range provided by the company.
- Once the company decides on the type of IPO, it can issue the shares to the public. The interested investors can apply, and once the subscription period ends company allot the shares.
- Once the process of issuing an IPO is complete, that company’s shares can be freely traded in the secondary market.
How to Buy An IPO
You buy an IPO in straightforward steps once you know what an IPO is. Check out those easy steps about how to buy IPO mentioned below.
Step-1 From the broker, you may fill out the form for an IPO subscription. Or you can apply for an IPO via an online app by submitting some crucial documents.
Step-2 While applying for an IPO, you must submit your bank and personal details, including aadhar card, Pan card and address proof.
Step-3: You must provide your total investment amount based on the minimum subscription amount.
Step-4 From the ten days of listing, the shares will be allotted to you.
Essential Considerations Before an IPO Subscription
Before investing in stock/shares, it is mandatory to know the market dynamic. For every intelligent investor, it is compulsory to check the company’s financial statement and assets column before buying the shares. For an informed decision, every investor needs to check how the company will use the money they get by issuing the IPO. Once you understand the objective and reason behind an IPO, you can apply for an IPO.
The Reward And Risk
While applying for the shares during an IPO, if IPO is allotted to you, you become the company’s first shareholder. As the company gains the profit, the price of the shares will rise, and you will be able to earn part of the profit. But in the stock market, there is also risk included in it. The growth and expansion of your investment depending on the company’s development. If due, for any reason, the company’s performance falls, then it may increase the chances of losing your money. Hence, in an unlisted company, it is always advisable to invest carefully because you can’t analyze their performance based on past charts. If you want to learn how to explore the company’s performance through technical and fundamental analysis and make your investments safer, then enroll today in the Best Stock Market Course In Delhi.
The Bottom Line
Investing in IPO gives you both advantages and disadvantages. Hence, it all depends on the position market and the company’s past performance. Before applying for an IPO, knowing what IPO is and how to invest in it is mandatory. This article is a complete guide about IPO where you will learn every helpful information about IPO.