How was the overall Market Gurukul Session 4?
You get to understand all the IPO terms, the probability of receiving the IPO, how investors behave during the IPO curve, and which are the critical myths about demat ac/. Plus an in-depth discussion on the following topics:
• How to understand if the co. is overvalued
• Difference between ratios and IPO dissection
In this IPO series you’ll find the best details about IPO Investing:
Parthiv Shah (IPO Investing Decision Making Simplified)
- 18+ years of experience in the market, strong hold on fundamental analysis, expert in mutual fund distribution & IPO
- Guest faculty in Ahmedabad & Nirma University
(zoom in to see the numbers & co. names clearly)
The core of this session was how a retail investor can decide to invest in an IPO or not by reading the needed pages (40-50) of DRHP.
Parthiv showed a smart structure on how does IPO benefit investors
As you see, within 4-5 days you can reap more than 20% ROI. Though the luck of IPO isn’t for everyone, still try multiple times to succeed. Whichever IPOs came in 2023 & 2024, hardly less than 10% of teh IPO have opened below the issue price or after listing they’re still quoting below the issue price with a good variety of companies. There’s still a great story in the Indian IPO.
Many people don’t know that you can open your demat A/c of your minors, & HUF. The more applications you fill of different family heads, the higher the probability of you receiving the IPO.
(zoom in to see the numbers & co. names clearly)
Investors are seeing more ladoos in SMEs than Mainboard. Mainboard IPO here means companies who gonna be listing on their respective NSE & BSE platforms. SEBI is directly involved in the mainboard IPO. Most credible companies will choose mainboard IPO where there’s a high chance of investing base (1 share = Lot). SEBI regulates the mainboard document (there’s no bias SEBI gives to listed entities)
Market makers who are SEBI registered have some stake in the original IPO to provide liquidity. If there’s no one is agreeing to buy or sell, market makers will quote you.
The regulator feels if SMEs become too regulated, companies won’t pick this option then. SME exchange is the roadmap where companies enter into mainboard IPO.
SME is a high-risk & high-return area that HNIs can understand well (so regulators make high entry barriers to not let retail investors enter). Here the exchanges govern the documents. Exchanges work is to earn. Sometimes exchanges can be biased (as if the co. gets the confirmation and carries the operation on the same board), Liquid is highly required in the SME IPO. Few companies in the SME file the reports early (showing good corporate governance).
(Zoom in to see the statements clearly)
Types of IPO investors
In the QIB (SEBI registered) category, every small passive investor’s money is involved with QIB. QIBs have a solid research team (who pumps up a lot of money if they’ve studied the sector & co. well). QIB can’t withdraw the funds once they bid it.
Eligible employees: there are many companies who think their employees should also get some share with some discount (they encourage applying for the retail category too).
Anchors investors: A list of anchor investors is open before a day of retail subscription. Here promoters feel if they show good names in the anchor list, they mostly get a valuation premium. Regulators do a good job applying rules like (exiting 50% of the holding after 30 days and the rest in the next 90 days).
RHP (red herring prospectus) is the doc after SEBI reviews the DRHP. Regulators won’t interfere in the pricing of the co. Institutes don’t get any type of discount on the issue price.
Covering the table of contents in the RHP:
- Taking 1st the offer documents summary (investors get the conviction to read ahead).
- 2nd one as risk factors (only related to business & lawsuit risks)
- The main sector is about our co. where it contains highly constructive data (even more than the annual reports). Analysing all the qualitative aspects. The dividend policy shows the company’s cash generation ability.
- 3rd one to read is a summary of the financial statement
The last few reasons why the IPO gets rejected are covered with a short Q&A round.
Launch your Graphy