IPO Basic Guide: Initial Public Offering, Latest IPO News, Issue Price & Listing Details

IPO Basics Complete Guide, Benefits, Types, How to buy & List of Upcoming IPO

Warm regards Investors

You must have heard the names of big companies like the Reliance, the D-Mart, the Fortune and many like these. They all keep on extending their business on new themes with the same brand name.

In India, every day, hundreds of startups are also commenced.  So, whenever any new unit gets open in the Share market, it has to go through a common channel, which is known as the IPO.

This article will present you with detailed knowledge about IPO basics.

What is IPO and its Process

IPO

Now let us explain to you the term IPO.

What is the full form of IPO?

The IPO full form is Initial Public Offering (IPO). As the name suggests, it means the company approaching the market to raise fresh funds or to list in the share markets.

Is the IPO full form in banking and IPO full form in market the same?

Yes, it is one and the same. It is Initial Public Offer in both cases. You normally apply for IPO through the banker to the IPO whereas after listing the IPO is traded in the share market.

IPO or Initial Public Offering is a process for every new company to offer its shares to the public for the first time. It means that when the company lands in the share market, before that it has to sell its ownership to the public to raise the funds through them and this is required to be done through the process called the IPO (Initial Public Offering).

IPO is the compulsory process which is required to be followed by every new brand/startup/unit. If any new company attempts to skip this process, then it will not anymore be tagged the title as “the legal company” and therefore, it will not be listed in the stock exchanges like the NSE or the BSE.

Why do we need IPO?

IPO is literally very essential to get your company listed on the market. “Listed in the market” implies that after completing the process of IPO, your firm is given a green card by the SEBI to trade in the stock exchange market. It can sell or buy the stocks to and from the public or interesting parties respectively.

IPO is just a medium to get your company registered with the NSE and the BSE, after finding it happening and financially capable by the SEBI.

How does a Company offer IPO?

You must be pondering how do you trade in an IPO? Right? What are the steps of an initial public offering?

It is a step by step process. It involves-

  • Any company alone cannot raise funds from the public. Rather, it needs support from a financial institution and for that, it hires an investment bank. The Investment bank can be any legalized bank.
  • These investment banks act as a mediator between the company and the public.
  • The investment bank helps the company to raise funds from the public by offering debt or equity shares to them.
  • Now you know well that the shares are bought at a certain price by the customers and this price value for each share is first negotiated between the company and the investment banker. With the mutual understanding between these two entities, a fair price is finally announced in the market.
  • It is to be noted that the stocks/shares are offered to the public to apply for the subscription for a certain time period. Generally, the duration of this offer remains for 3 to 10 days only. During this period, the investor can apply for the company IPO and can acquire the ownership in the company, after getting the allotment of the applied shares.
  • After the price value for shares is decided by the investment bank and the company, the shares are offered in the market for the public.
  • But before offering in the market, the investment bank takes the whole SRS of the company to the SEBI. The SEBI checks the whole documentation and the agreement details between the investment bank (the underwriter) and the company. It also verifies financial statements, management background, any legal problems, where the money is to be used etc. After investigation of all such documents, the SEBI approves the offering for IPO and also set an effective date when the stock will be offered to the public.
  • The public who finds interest in the offer applies to the shares and in this way, the company raises funds from them.
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Here, a question arises is that why these companies need funds from the public? What is the motive behind it?

So the answer is as simple as that, which is seen in everybody desires-

  • The company raises funds to expand its existing units or launching new themes in the market.
  • The company may want to pay its debts or loans.
  • The company may want to fulfill its other liabilities.

If you want to check the objectives of the company for raising the money from the public, then you can refer to the Red Herrings of the company. It discloses all the information regarding the objectives of the company and the financial background of the company. It is like the prospectus which is available publically.

You can grab the red herrings of any company from the website www.sebi.co.in

Types of IPO

The company can issue shares at a certain price value. This price value is set on the basis of two types. These are

  • Fixed Price
  • Books building

When the company offers shares to the public at a fixed price, then the investors have to buy the shares at that fixed price only. There is no choice of negotiation there.

When the company and the investment bank (the underwriter) set a price band with mutual negotiation and that price band ranges between two numbers, then it is said to be the book building price.

Suppose, if a company has issued 100 shares to the public for price band- 10 to 20. It means that it is offering the public a choice to buy the company’s shares at any price which is falling between 10 and 20 rupees.

In case of a fixed price, the company does not disclose any choice. If the same 100 shares are available to be sold at price Rs 10, then the public has to buy the shares at Rs 10 only.

IPO Allotment Tips

How to Buy IPO?

You should and you can invest in IPO, but your decision should be backed with the careful analysis of the company and related associated associations. After analyzing the company details from every angle and after confirming it with the standard benchmark, then only you should invest in IPO.

The factors of considerations may be as under-

  1. You should read the whole prospectus of the company from the red herrings. You should figure out its financial background details, the company’s risk-bearing capacity, the liabilities, and its performances. The company with a sound performance workout should be opted by you.
  2. You should collect the details regarding the underwriter. The underwriter is nobody but that investment bank only who sponsors or sell the securities in the market for the company. You should observe that who is the underwriter and for which company it is underwriting. Usually, a potential IPO is backed by the big-brokerages/underwriters that have the ability to endorse a new issue as well.
  3. Lockup periods
    Often IPO takes a deep downtrend after the IPO goes public. The reason behind this fall of the share price is the lockup period. A lockup period is a contractual caveat that refers to a period of time the company’s executives and investors are not supposed to sell their shares. After the lock-up period ends, the share price experiences a drop in its price.
  4. Flipping – People who buy stocks of the company going public and sell-off on the secondary market in the view to get quick money are called flippers.  Flipping initiates the trading activity.
  5. You should also mine out the details about the promoter of the company and his/her performance in the past years.
  6. You should also consider the risks aspects engaged in the execution of the plan.
  7. What is Demat Account and how it works?
  8. Income Tax on profit from Share trading in India

Things you should know before investing

It is a universal truth the business means the risk. The risk factor is associated with every kind of business, whether it is a short cap business or a large-cap business. The presence of risk appetite can lead the firm or the investor at the most successful latitudes of the returns by gaining the highest returns, or it is the risk factor only, which can drop the investor in the pool of bad-debts of the share of losses.

So, before investing in the IPO, it should be knotted in your mind that there will be a risk definitely in this. No company will ever guarantee you to preserve your capital from losses. The returns will depend upon your risk appetite and the market conditions as the stock trade are subjected to market risks always.

If you fear to take any risk or you have less knowledge about the share market, then you can take help from some professional expert.

Benefits of IPO

  1. Listing of shares

The company after getting listed through the IPO process is able to trade regular in stocks in the market.

  1. Accumulates wealth

The IPO enables the company to raise wealth from the public. Through this fund, the company can use it to pay its liabilities and extend its business.

  1. Owner diversification

The promoter of the company can diversify his/her business on various grounds on different themes with the use of generated funds from the public.

  1. Other advantages include increment in financing prospects, executive compensation, and increment in the company’s prestige.

Disadvantages of IPO

  1. Short-term growth pressure

The company feels the pressure of growing rapidly within a short span of time because they have the pressure from the interesting investors and the underwriters and that of the SEBI.

  1. Disclosure of confidentiality-

The company has to disclose its confidential details regarding all its liabilities and financial knowledge because they have to show the company’s details in its prospectus to attract the investors to buy its shares.

  1. Restrictions on management, loss of personal benefits and trading restrictions are some other disadvantages associated with the upcoming IPO.

Current IPO 2020

List of IPOs in 2020 IPO Size (approx) Tentative Date
CAMS IPO Rs. 1500 cr Sep 21, 2020
Route Mobile IPO Rs. 600 cr Sep 9, 2020
Happiest Minds IPO Rs. 700 cr Sep 7, 2020
Rossari Biotech IPO Rs. 9000 cr MAR 2020
SBI Cards IPO Rs. 9000 cr MAR 2020
UTI AMC IPO Rs. 3000 cr MAR 2020
LIC IPO Rs. 10000 cr JUNE 2020
NCDEX IPO Rs. 500 cr MAY 2020
Prince Pipes IPO Rs. 500 cr Dec 18 – Dec 20, 2019
Ujjivan Small Finance Bank IPO Rs. 750 cr Dec 02 – Dec 04, 2019
CSB Bank IPO Rs. 400 cr NOV 22 – NOV 26, 2019
IRCTC IPO Rs. 645 cr SEP 30 – OCT 03, 2019
Spandana Sphoorty Financial IPO Rs. 1200 cr Aug 05 – 07, 2019
Affle India LTD IPO Rs. 459 cr July 29 – 31, 2019
Sterling & Wilson Solar IPO Rs. 4500 cr 2019
HDB Financial IPO Rs. 10000 cr 2019
IndiaMart IndMesh IPO Rs. 475 cr June 24 – 26, 2019
Neogen Chemicals IPO Rs. 132.35 cr Apr 24 – 26, 2019
Polycab India LTD IPO Rs. 1336 cr Apr 05 – 09, 2019
Railway Vikas Nigam IPO Rs. 482 cr 29th March – 03rd APR
Embassy Office Parks REIT IPO Rs. 4750 cr 18th – 20th MAR
Patanjali IPO (Patanjali Ayurved IPO) NA 2020
Xelpmoc Design and Tech Ltd Rs. 20 cr 2020
Chalet Hotels Ltd NA 2020
NA 2020
Harsha Engineers Limited NA 2020
Dodla Dairy Ltd NA 2020
NA
Zircon Technologies (India) Ltd NA 2020
Studds Accessories Limited NA 2020
Chartered Speed Ltd NA 2020
Century Metal Recycling Ltd NA 2020
Penver Products Limited NA 2020
Sembcorp Energy India Ltd NA 2020
Lodha Developers  NA 2020
Capricorn Food Products India Ltd NA 2020
Prince Pipes and Fittings Ltd NA 2020
Nazara Technologies NA 2020
Patel Infrastructure Limited NA 2020
John Energy Limited NA 2020
Aakash Education Services NA 2020
Anmol Industries Ltd (Anmol Biscuits) NA 2020
Ami Organics Ltd NA 2020
Mrs. Bectors Food Specialities Ltd NA 2020
Senco Gold Limited NA 2020
Angel Broking Ltd NA 2020
FLAIR WRITING INDUSTRIES LIMITED NA 2020
Metropolis Healthcare Limited NA 2020
AGS Transact Technologies Ltd NA 2020
Coldex Limited NA 2020
Shyam Metallics and Energy Ltd NA 2020
AnandRathi Wealth Management Ltd NA 2020
Crystal Crop Protection Ltd NA 2020
Penna Cements Ltd NA 2020
Barbeque Nation Hospitality Ltd NA 2020
IRCTC Ltd NA 2020
Rail Vikas Nigam Limited NA 2020
Reliance General Insurance Company Ltd NA 2020
National Stock Exchange (NSE) NA 2020
KIMS Hospitals NA 2020
Lite Bite Foods NA 2020
National Insurance Company NA 2020
Indian Renewable Energy Development Agency Ltd NA 2020
Indian Railways Finance Corporation Ltd  NA 2020
Devi Seafoods Ltd NA 2020
ReNew Power Ltd NA 2020
Route Mobile Limited NA 2020
Flemingo Travel Retail Ltd NA 2020
Sandhya Marines Ltd NA 2020
Nekkanti Sea Foods Limited NA 2020
K P R Agrochem Limited NA 2020
Atria Convergence Technologies Ltd NA 2020
GR Infraprojects Ltd NA 2020
Mazagon Dock Shipbuilders Ltd NA 2020
PNB MetLife Insurance Ltd NA 2020
Shakun Polymers Ltd NA 2020
PN Gadgil & Sons Ltd NA 2020
Fino Payments Bank Ltd NA 2020
Montecarlo Ltd (Construction Company) NA 2020
Craftsman Automation Ltd NA 2020
Spandana Sphoorty Financial Ltd NA 2020
Puranik Builders Ltd NA 2020
Vectus Industries Ltd NA 2020
Milltec Machinery Ltd NA 2020
Bharat Hotels Limited NA 2020
Affle India Limited NA 2020
Muthoot Microfin Ltd NA 2020
ASK Investment Managers Ltd NA 2020
Nihilent Limited NA 2020
Sansera Engineering Limited NA 2020
Stove Kraft Limited NA 2020
T & T Infra Limited NA 2020
Inventia Healthcare Limited NA 2020
Narmada Biochem Limited NA 2020
NECCON POWER & INFRA LIMITED NA 2020
EMAMI CEMENT LIMITED NA 2020
Neogen Chemicals Limited NA 2020
JSW Cements NA 2020
Shriram Properties Ltd NA 2020
Antony Waste Handling Cell Ltd NA 2020

List of New and Upcoming IPOs in India

Company Name IPO Size (approx)
Sembcorp Energy India Ltd NA
Lodha Developers  NA
Capricorn Food Products India Ltd NA
Prince Pipes and Fittings Ltd NA
Nazara Technologies NA
Patel Infrastructure Limited NA
John Energy Limited NA
Patanjali IPO (Patanjali Ayurved IPO) NA
CMS Info Systems Limited NA
Gandhar Oil Refinery Ltd NA
Laqshya Media Ltd NA
Genesis Colors Ltd NA
Seaways Shipping and Logistics Ltd NA
Barbeque Nation Hospitality Ltd NA
IRCTC Ltd NA
Rail Vikas Nigam Limited NA
Go Air. NA
ACME Solar Ltd NA
Reliance General Insurance Company Ltd NA
Continental Warehousing Ltd NA
Aakash Education Services NA
Seven Islands Shipping Limited NA
SREI Equipment Finance Limited NA
Bharat Serum and Vaccines Limited NA
PolicyBazaar.com NA
GMR Airports Ltd NA
National Stock Exchange (NSE) NA
KIMS Hospitals NA
Kalyan Jewellers NA
Lite Bite Foods NA
Indiamart Intermesh Ltd NA
Energy Efficiency Services Ltd NA
National Insurance Company NA
Vishwaraj Sugar Industries Ltd NA
Indian Renewable Energy Development Agency Ltd NA
Indian Railways Finance Corporation Ltd  NA
Rail Vikas Nigam Ltd (RVNL) NA
UTI Mutual Fund Ltd NA
Devi Seafoods Ltd NA
Anmol Industries Ltd (Anmol Biscuits) NA
ReNew Power Ltd NA
Voila F9 Gourmet Ltd NA
Route Mobile Limited NA
Flamingo Travel Retail Ltd NA
Sandhya Marines Ltd NA
Nekkanti Sea Foods Limited NA
K P R Agrochem Limited NA
Atria Convergence Technologies Ltd NA
GR Infraprojects Ltd NA
Mazagon Dock Shipbuilders Ltd NA
Genius Consultants Limited NA
Crystal Crop Protection Ltd NA
Hinduja Leyland Finance Ltd NA
PNB MetLife Insurance Ltd NA
AnandRathi Wealth Management Ltd NA
Shakun Polymers Ltd NA
PN Gadgil & Sons Ltd NA
Fino Payments Bank Ltd NA
Montecarlo Ltd (Construction Company) NA
Century Metal Recycling Ltd NA
Chalet Hotels Ltd NA
Dodla Dairy Ltd NA
Craftsman Automation Ltd NA
Penver Products Limited NA
Spandana Sphoorty Financial Ltd NA
Puranik Builders Ltd NA
Vectus Industries Ltd NA
Milltec Machinery Ltd NA
Bharat Hotels Limited NA
Ami Organics Ltd NA
Affle India Limited NA
Muthoot Microfin Ltd NA
ASK Investment Managers Ltd NA
Shyam Metallics and Energy Ltd NA
Nihilent Limited NA
Sansera Engineering Limited NA
Mrs. Bectors Food Specialities Ltd NA
Harsha Engineers Limited NA
Senco Gold Limited NA
Xelpmoc Design and Tech Limited NA
Studds Accessories Limited NA
Angel Broking Ltd NA
Chartered Speed Ltd NA
Stove Kraft Limited NA
T & T Infra Limited NA
Inventia Healthcare Limited NA
FLAIR WRITING INDUSTRIES LIMITED NA
Zircon Technologies (India) Ltd NA
Narmada Biochem Limited NA
Metropolis Healthcare Limited NA
NECCON POWER & INFRA LIMITED NA
EMAMI CEMENT LIMITED NA
Polycab India Limited NA
Neogen Chemicals Limited NA
AGS Transact Technologies Ltd NA
Coldex Limited NA
JSW Cements NA

So, this is all about IPO and its process.

Conclusion-

Dear readers! Thanks for taking out your valuable time for reading the content about IPO basics.

If you want to enter into the ownership of some big and good company, the IPO is a simple and direct way to execute it. The IPOs for a company are opened once and you need to invest in these after careful analysis of the company’s financial and performance details.

If you have any queries in your mind, just land them in the comment box given below.

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I am much delighted to share my knowledge on What is an IPO basic? you hope it helps.

Thank you & I wish you great luck ahead.

2 COMMENTS

  1. HI…

    Thanks for your detailed information. I would like to know how to buy IPO shares. Do we need to follow usual process to buy IPO shares or its different. Please advise us.

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