An IPO (Initial Public Offer) is a public offer made to investors for the first time to raise capital.
IPOs often seem like the safest bets out there...you buy low and sell high. This makes investing in IPO a high-growth potential opportunity.
But this is not as easy as it sounds. The critical part is to choose the right companies to invest in.
Here are a few points to consider while selecting which IPOs to invest in.
#1 Promoters stake post issue
#2 Financial position
#3 Stock price valuation
It is important to dwell deep on the promoter's stake as it indicates the management's commitment to the company and the company's vision.
The financial position reflects the projects in the pipeline and the stability of the company's performance in future.
The stock before the IPO can get overpriced because of the hype in the market and can crash down post the IPO. It was one of the reasons for the failure of the Paytm IPO.
It is essential to consider these points because even high-profile IPOs like Paytm and LIC have debuted poorly.
For more information on IPOs, check out the list of upcoming IPO's.
You can also find out the performance of past IPOs here.
Also watch the below video where Richa Agarwal explains what to look for in a winning IPO.
Happy Investing!
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