- Closed and Listed IPO in October 2023
- List of Open IPOs to Invest in November 2023
- What is Initial Public Offering (IPO)?
- Types of IPO
- How Does an IPO Work?
- Why Do Companies Opt for IPO?
- Advantages and Disadvantages of IPO For a Company
- Advantages and Disadvantages of Investing in IPO
- Things to Consider Before Investing in IPO
- Terms Associated with IPO
- Frequently Asked Questions
Closed and Listed IPO in October 2023
|Company Name||Issue Price||Listed Date||Open||Close|
|IRM Energy||505.00||26th Oct||478.00||473.15|
|Vivaa Tradecom||51.00||12th Oct||40.80||42.54|
|Sunita Tools||145.00||11th Oct||155.00||147.25|
|City Crops Agro||25.00||10th Oct||25.50||25.42|
|Valiant Laborat||140.00||6th Oct||170.50||169.05|
|Organic Recycli||200.00||6th Oct||215.00||225.75|
|Updater Service||300.00||4th Oct||283.05||283.85|
|JSW Infra||0.00||3rd Oct||165.50||157.30|
|Manoj Vaibhav G||215.00||3rd Oct||215.00||215.65|
List of Open IPOs to Invest in November 2023
|Company Name||Issue Price||Open Date||Close Date|
|ESAF Small Finance||NA||03-Nov||07-Nov|
|KK Shah Hospital||45.00||27-Oct||31-Oct|
Explore: Upcoming IPOs 2023
What is Initial Public Offering (IPO)?
The “Primary Market” and the “Secondary Market” are the 2 segments of the capital market. The new issuers are a part of the primary market. While the stock market represents the secondary market. New Issuers use the primary market to raise new funds from investors through rights issues, initial public offerings and offers to sell equity or debt.
IPO means selling the securities on the primary market to potential investors to raise funds. It is the company’s main source of funding with a long-term or indefinite maturity.
An IPO is a crucial stage in a company’s development. It allows a business to obtain capital through the public capital market. An IPO also significantly boosts a company’s reputation and media exposure. An IPO is frequently the sole option for financing rapid development and expansion. When a lot of initial public offerings (IPOs) are made, the economy and stock market are both in good shape.
By investing in shares, shareholders get ownership rights to the company and become owners of it. They can sell these shares anytime in the stock market, which is the secondary market.
Types of IPO
- Fixed Pricing:
The price at which the securities will be assigned and offered is set by the company and a merchant banker. Usually, the fixed price and the justification for the price are listed in the prospectus. The demand for the shares can be determined only after the issue has been closed. Applications under Rs. 2 lakh are eligible for 50% of the offered shares, and applications for higher amounts are eligible for the remaining 50%.
- Book Building:
According to the SEBI guidelines, book building means ‘a process undertaken by which a demand for the securities proposed to be issued by a body corporate is elicited and built-up, and the price for such securities is assessed for the determination of the quantum of such securities to be issued by means of a notice, circular, advertisement, document or information memoranda or offer document”.
Book Building is a process where bids are gathered from investors at various levels that are more than or equal to the floor price. This collection is throughout the time that the IPO is open. After the bid closing date, the offer price is set.
The company issuing the shares can issue in the following ways through book building process:
- 100% of the net offer
- 75% of the net offer and 25% at the price, which is calculated through the book building. After the Book Built portion, the Fixed Price portion is done in the same manner as a standard public offering.
How Does an IPO Work?
Every issuer of IPO must follow the following steps for a successful listing of its securities:
- For the purpose of listing its securities on stock markets, the issuer submits an offer document in the required format to the Securities and Exchange Board of India (SEBI), stock exchanges, and the Registrar of Companies (ROC).
- The issuer receives remarks from regulatory agencies.
- After complying with all requirements, the issuer can launch the offer.
- The issuer then invites the general public to invest in the IPO within the predetermined timeframes.
- Shares of the company are traded on the stock exchange(s) where they are listed when the Offer is successfully completed.
Why Do Companies Opt for IPO?
The following are the major reasons why companies opt for IPO:
- Companies raise funds through initial public offerings (IPOs) to finance business expansion, research investments, debt repayment, infrastructure development, and other purposes.
- Liquidity is boosted while buying and selling stocks publicly. It makes room for employee equity ownership programs, such as stock options and other compensation schemes, which draw in the cream layer’s most talented individuals.
- A company’s shares can be sold to the general public to generate significant liquidity and capital. This, in turn, can be used to enhance the company’s future. As a result, the business will be in a stronger financial position to make a loan request or negotiate loan terms.
- When a business goes public, it indicates that it has achieved sufficient success. Having the company listed on stock exchanges extends credibility and exposure.
Advantages and Disadvantages of IPO For a Company
Advantages of IPO
- With IPO a company can raise additional funds through secondary offerings for extra money in the future.
- Increased visibility, reputation, and public perception of the business, as well as easier takeover negotiations (share conversions), may enhance the business’ sales and earnings.
- Through involvement in stock equities such as ESOP, better management and qualified professionals are attracted and retained.
Disadvantages of IPO
- The costs of IPOs and maintaining a public company in operation are ongoing and typically unrelated to other business expenses.
- Any fluctuation in the stock price can affect the credibility of the company. Moreover, fluctuations in a company’s share price can be a distraction for the management.
Advantages and Disadvantages of Investing in IPO
Many investors choose to enter the stock market through IPO. While an IPO can be advantageous for many investors, it has limitations as well. The following are some of the advantages and disadvantages of investing in an IPO.
Advantages of Investing in IPO
- Every investor buys the shares at the offer price that is listed on the prospectus. If the listed price on the stock exchange is higher than the offer price then an investor will have a listing gain. This is a major advantage and attraction for investors while opting for an IPO.
- When you invest in a small business with the potential to become large, the IPO is frequently the best option. This is so that investors can benefit from the company’s lowered share prices. As a result, you can benefit from an IPO because it might be challenging to purchase shares as their value rises.
Disadvantages of Investing in IPO
- There is no guarantee that small retailers or investors will be allotted shares in the IPO. Mostly the allotment is carried away by large retail investors, financial institutions, and so on.
- You must thoroughly research the firm and its track record before filing an IPO. Although the company’s prospectus material can be read, understanding it requires effort and time.
Things to Consider Before Investing in IPO
The following are things to consider before investing in IPO for every investor:
- The first thing to consider is the investment objective. If the objective is to just realise listing gain then the investor must understand the existing market factors. If the goal is a long-term investment then the investor must understand the fundamentals of the company elaborately.
- Invest based on your own risk appetite and investment parameters.
- Examine the company’s valuations and offer prices. These values depend heavily on the industry, company size, past financial statements, and future opportunities. The offer price must justify these factors.
- Before participating in any IPO, investors should read the prospectus to understand the risks involved as well as how the company plans to use the capital raised by the public.
- Investors should assess the promoters and managers of the company. They have an impact on all of its operations and functions.
Terms Associated with IPO
- Issuer– An issuer in IPO is the issuing company which is issuing securities in the primary market.
- Underwriter– An underwriter is an entity that is in charge of assessing and taking on the risk of another party. The initial offering price of the securities in question will be decided by IPO underwriters. Additionally, they purchase the securities from the issuer and then sell them to investors through the distribution network of the underwriter. Investment banks typically hire IPO specialists to serve as their IPO underwriters.
- Listing Date– A listing date is a date on which the company shares trade on the stock exchange after IPO.
- Price Band– The price band is the range within which the investors can bid. If the price band is Rs 100 to Rs 150. Then investors can bid for any figure within this band.
- Cut-Off Price– It is the lowest price at which the company allots their shares in the IPO.
- Lot Size– This is the minimum number of shares that any investor must bid for.
- Under Subscription – If the request received for allotment is lower than the offered number of shares then it is under subscription.
- Over Subscription– Opposite to under subscription, if the request received for allotment is higher than the offered number then IPO faces an over subscription.
- Draft Red Herring Prospectus– Before the IPO process, the company submits this document to SEBI stating the objective of an issue and other financial information.
- Retail Investor– Investor who buy investment products through traditional platforms such as brokers and aggregators.
- HNI– High net-worth individuals are a class of investors with an investible surplus of more than INR 2,00,000.
- Institutional Investors– Organizations with financial investment and trading as a part of their business. These include banks, hedge funds, asset management companies, venture capital firms and so on.
Frequently Asked Questions
Issue size is the total number of shares offered to the public.
The price band is the price range within which an investor must bid for the allotment of shares.
The open date is the day on which the IPO starts accepting bids. On the other hand, the close date is the day on which the bidding is closed.
An IPO is an excellent investment option if dealt with excellence and caution. IPO is more suitable for investors who understand the risk associated with IPO and fundamentals of the company. The investment objective of the investor must match the IPO aspects. If the goal is long term then the investor must understand the financial fundamentals of the company.
The major benefit of investing in IPO is that investors can gain from the offer price and future appreciation in the stock price. With a long-term goal, an investor can build a portfolio with a higher gain. However, a short term benefit will be gained from the listing price. Every investor must understand their goals and the company’s financial fundamentals before investing.
No, you cannot apply for an IPO after market closing hours.
You can invest in an IPO through a broker, aggregator, net banking of your bank, or directly with ASBA. You must mandatorily provide your PAN, lot size, and bid price for allotment.
You can check the status of allotment on the website of the aggregator, broker, NSE, BSE, or registrar. You must provide your PAN, application number, and account number.
You can increase IPO allotment chances by following a few strategies. You can make multiple applications with different accounts, avoid large applications, bid at cut-off price, submit a correct application, and apply as soon as the window opens. These strategies do not guarantee IPO allotment. However, these might increase the chances.