In old days company launch IPO to fulfill their business requirement to run and expand their company to higher levels but now a days many company’s promoter want to listed their company into market and earn quick money from investors and becoming fools to investors but no on is aware about that because promoter are smart they give money to fininfluncers to review ipo of their company and talk only positive about it.
But fake review will always attract poor and greedy investors to buy shares of their company because new investors psychology is bad they always in search for get rich quick from markets.
Not all companies promoter do this same thing some wants to really groww company and help economy. but how to check if any company is good ? is ipo really great means they want to do right things after getting money. how they spend their money ? how they achieve their goals ? is really they achieve what they talk last year ? many questions arises in your mind but don’t bother i will help you to choose best and hold for long term.
Check Business Segment before applying for IPO ?
Anyone who want to invest in ipo kindly check in which sector companies business run or we say operate because if some company have in steel, metal, mining and psu sector then those companies are not best suitable for investors, because government change any rules those business get affected or old sector cause great bad effect in future means in future this sector is not going to perform very well because of electric vehicle or green energy.
if any company operate in banking, IT, FMCG, etc sectors then those will generate long term wealth for shareholders because this above mention sectors will not get affected in any adverse state like in corona virus we never ban eating breads or using online services or without online payments we can’t survive now a days so they cant ban.
Promoters past history and their experience ?
The only person who knows very well about company is promoter because he or she started company with his or her own goal and they know how to achieve it but if they cheat will investors and try to make fraud with them then who will know about their evil mind so checking promoters background is one of the most important parameters to do.
promoter experience is must because any promoter is good trustable and loyal with shareholders but they not have much experience about what they do ? how they do ? how to work in recession ? how to handle company when things getting bad ?
This questions shows that only good promoter is not enough but also have deep experience in their own field. promoter have one of those qualities like work in any conditions, handle bad times, leadership, etc if these have in he or she they they that much more advantage than their competitors.
Do fundamental analysis of IPO ?
After following above steps then do fundamental study about company’s financial like how much they earn and spend ? their working capital and how much money is left after all this expenses ? this are some task to do in financial analysis.
Fundamental study is hard because you want to invest for long time. you not only invest you money but also your time into doing study and taking risk but get money in rewards. Generally those company who launch ipo have some financial issue that’s why they launch initial public offering of their company.
Subscription details about IPO ?
Subscription details is one of the best indicator means parameter to check before buy shares.This show how much smart money goes into company for long horizon.Smart money means QIBs. Qualified Institutional Buyers are those persons who have much more detailed knowledge than retail investor.
Generally apply only for those ipos which subscription is more than 100x in QIB category. if QIB believe an invest then they not invested their money for loss they have some faith in company.
But after checking subscription of third day how to apply for ipo ? then buy shares from open market means from stock market directly and hold them.