Keep these things in mind while you invest money in IPO. | Investing IPOs

 

Keep these things in mind while you invest money in IPO:

 

We are talking about the year 2021. The markets were running at a stormy pace. Many IPOs were coming very quickly. There was happiness all around. Some people were keeping their distance from the market till then. But when everyone was earning big money or should we say that news of people making money from the market was coming, then those people also got greedy and invested money in IPOs. 

In some they also got shares. But they didn't turn out to be so lucky. Today their shares are down 60 to 70% from their issue price. This means that ₹ 1 Lakh is now reduced to less than ₹ 40,000. Now they are cursing themselves at how they put their hard-earned money into these IPOs. These people are in large numbers, who invest money in IPO or the stock market without doing any research.

 

You invest money in IPOs without doing any research and later suffer losses. What to look for while investing in IPO? This question comes to the mind of every new investor entering the stock market. We will tell you those 10 things keeping in mind that you should invest money in IPO. 

The first point is to always read DRHP. DRHP means Draft Red Herring Prospectus. Every company that brings an IPO has to submit a document to SEBI and it contains every small and big information related to the IPO and the company. It also mentions the risks for investors. 

The second point is where the money will be invested. Find out where the company is going to use the money it is raising. If the company is only going to pay off debt with this money, it is not very attractive. If the company will spend money on the expansion of the business, then there are more chances of increasing your money. 

The third thing is to understand the business of the company. Before investing money in IPO, know what business the company does. What is the position of the company in the market, and what are the challenges in front of it? How scalable is the business, that is, how big can it be made? The main thing is that you should invest money in the same company whose business you understand.

 

The fourth point is to look at the background of the promoters and management of the company, who is running the company, and how? Look at the promoters and management team. The company is in the hands of these people. Must see his records. 

The fifth point is in the business of selling and exploring the company's prospects. There are so many possibilities in this that how much the company can grow. If the company does well after raising capital, then investors will get good returns.

 

The sixth thing is what is the strength and strategy of the company. You have to check the strength of the company. You will find much important information about this in DRHP. Also, see what strategy the company is following. 

The seventh point is, to take a look at the financial health and valuation of the company, and how is the financial performance of the company. See whether the company's revenue and profit have increased or decreased over the years. You should also look at the valuation of the company. 

The eighth thing is, Investors should look at the competitors of the company before investing money in the IPO to compete with other companies. In this, you can see the financial figures as well as the valuation. 

The ninth thing is to find out the increased risk factor. Check this, what is the biggest risk factor for the company? Sometimes there are some legal issues and liabilities. These can disturb the business of the company. 

And the 10th and last point is an investment. How long to invest Get an idea of the duration of your investment. Are you investing money in IPO so that you can make quick money from the listing or do you want to stay in it for a long time? Many things will become clear from this also.

 

So these were the 10 things after considering which you should invest money in an IPO. If some people had invested money in IPO after doing proper research leaving haste, they would not have been at loss. Do a lot of research and only then think about investing. 

So stay with us for such useful information. If you like the information, please comment on our site www.tradeipohub.co.in. Thanks for reading.