Here are some steps to identify good and bad IPOs.
If you are searching for the best IPO or willing to invest in IPO market, you must know what exactly an IPO is. IPO, Initial Public Offering is generally the initial offering phase for a company’s share, when a new or existing company offers its shares to the public for the first time for raising funds and getting listed at the stock exchange. Many people or investors get into the concept of IPO investment in the IPO market, search for the best IPO in order to receive considerable profits. But, for many newcomers in the IPO market, it becomes difficult to understand the process and, most importantly, search for the good IPO or best IPO to invest in. The IPO market is the place where you can easily lose your investment amount if you are not investing properly at the right company. Therefore, before beginning with IPO investment, you need to grab some points in your mind to search for the best IPO for investment. Here are some points which you should consider.
Few Tips to Find the Best IPO
The IPO market is a major part of the equity market, can’t we say that? The true fact is IPOs are flooding the equity market with its major presence every month or every year, and this makes the investor spoilt for making a good choice to find a perfect IPO for investment purposes. If you are facing the same issue, don’t worry! We are listing some of the evaluation criteria, which can help you to find the best IPO in this wide IPO market and invest genuinely.
Now, what do we mean by a company’s business strength? Before searching and proceeding with a company’s IPO for investment, you should always review the business model, historical performance, and management credentials. One of the best starting points to evaluate a good IPO is going through the company’s prospectus. Companies that are undergoing an IPO always issue a prospectus. You can also refer to the external sources of research, such as the company annual report, website, and media reports. You should only proceed with the IPO investment if you are satisfied with the company business model, revenue potential, financial status, and management quality. Lastly, you should also consider a few factors like the position of the company in its industry and how it’s planned to overtake its competitors. While going through an IPO watch 2020, don’t miss these points.
Most investors think that if a company has a strong track record, it means the company will have strong revenue growth in the future. That’s a myth! If you are proceeding with an IPO investment on this basis, sadly, you can lose your money. Therefore, instead of moving on with the track record of the company, you should start your IPO investment analysis with an evaluation of the growth potential of the company in the industry. The best IPO is the one that has a strong future potential growth. For a good evaluation, you can consider factors such as how much the company has invested in technology, what is the status of its innovation culture, how the company is working on expanding its market, and so on. If a company is performing well on these parameters, you can shortlist it as the best IPO for investment in your IPO watch list.
Intentions of the Promoters
No one will exit a company if it’s having a goof growth and providing high profits. Analyzing the promoter groups is one of the best techniques to go on with your IPO investment research. If a promoter is having a high interest in IPO investment for a particular company, that means it is the best deal. According to the law, promoters should hold at least 20% after an IPO, but if the company is good, promoters usually held more than that. In case, any promoter is diluting its stake slowly, and this signifies that investing in that company is not worth it. Similarly, if a company’s management is also diluting its stake through the IPO market, you should avoid an IPO investment with that company.
Use of the Company’s Revenue
If you find the intended use of IPO investment money for the company, it can be easy for you to make a decision about the company. IPO money uses are normally mentioned in the prospectus itself, so you can find it there. Always remember that best IPO money is utilized in activities which are related to company’s growth such as entering into new markets, investing into new advancement in technology, setting up new production units or into merging and acquiring. These types of investments can always help a company in its future growth and increasing the revenue and profits, which will result in higher stock prices and in a way, the investors will be benefited. If this is the scene, you can go for this IPO for investment. Avoid the IPO investment for the companies having plans to repay old debts or settling of old claims with the IPO money.
Don’t run behind the fame of a company. Having a brand name does not fulfill the requirements to be the best IPO from others, and there are other factors to measure as well. During your IPO watch research and IPO investment analysis, you should always consider a company’s price-to-sales ratio and price-to-earnings ratio. To calculate the price-to-sales ratio, you can divide the price of a company’s share by its sales per share, and to calculate the price-to-earnings ratio, you can divide the price of a company’s share by its net income per share. To find these figures, you don’t have to face many hassles, because you can get these figures from the company’s income statement.
Now, when you are completed with the calculation, you will have to compare this with the company’s competitor’s figure. If the ratio is higher than the competitors, you should simply avoid such companies for IPO investment because their shares may be overpriced. But wait! Sometimes it may happen that the company has kept its share overpriced because it is really better than the competitor. In this case, you should do more research in your IPO investment analysis for the company. Simply check the company’s history as well as future prospects.
Picking a good IPO or the best IPO for IPO investment is not a hard task, but it is true that it requires a good analysis and research so that your investment gives you a good return. You can follow the above written IPO investment tips to search for the best IPO every time you want to enter the IPO market and invest in a valuable and rewarding company.
No IPO found
|Issuer Company||Exchange||Issue Open|
|Yes Bank Ltd FPO||BSE, NSE||Jul 15, 2020|
|Rossari Biotech Ltd IPO||BSE, NSE||Jul 13, 2020|
|Reliance Industries Ltd. (RIL) Rights Issue||BSE, NSE|
|Antony Waste Handling Cell Ltd IPO||BSE, NSE||Mar 4, 2020|
|SBI Cards and Payment Services Ltd IPO||BSE, NSE||Mar 2, 2020|
|ITI Ltd FPO||BSE, NSE||Jan 24, 2020|
|Prince Pipes and Fittings Ltd IPO||BSE, NSE||Dec 18, 2019|
|Ujjivan Small Finance Bank Ltd IPO||BSE, NSE||Dec 2, 2019|
|CSB Bank Limited IPO||BSE, NSE||Nov 22, 2019|
|IRCTC Limited IPO||BSE, NSE||Sep 30, 2019|
|Issuer Company||Exchange||Issue Open|
|Billwin Industries Ltd IPO||BSE SME|
|Nirmitee Robotics India Ltd IPO||BSE SME||Mar 31, 2020|
|DJ Mediaprint & Logistics Ltd IPO||BSE SME||Mar 26, 2020|
|Laxmi Goldorna House Ltd IPO||NSE Emerge||Mar 20, 2020|
|Cospower Engineering Ltd IPO||BSE SME||Mar 17, 2020|
|RO Jewels Ltd IPO||BSE SME||Mar 12, 2020|
|SM Auto Stamping Ltd IPO||BSE SME||Mar 3, 2020|
|ICL Organic Dairy Products Ltd IPO||BSE SME||Jan 31, 2020|
|Chandra Bhagat Pharma Ltd IPO||BSE SME||Jan 31, 2020|
|Tranway Technologies Ltd IPO||BSE SME||Jan 27, 2020|