What is IPO in Simple words?
The full form of IPO is Initial Public Offering. After releasing the IPO, the private company no longer remains private but becomes an IPO. The meaning of IPO is that when a private company gets listed in the stock market for the first time and goes to sell its shares for the first time, then it is IPO. After releasing the IPO, the private company no longer remains private but becomes public because public money is also involved.
Why does the company issue IPO and why does it send its shares?
To understand this, let me give you an example. Suppose I have a company worth Rs 100 crore, that is, its total valuation is Rs 100 crore. Now what I want to do is I want to internationalize the company, for which I will need Rs 25 crore. Now for Rs 25 crore, I can take a loan from the bank. If I take the loan, I will have to pay interest. I will also have to spend money. In that, everything will be returned to me. So, it is better if I get my company listed in the share market. After that, I will have to pay my company. If I release an IPO, after this people will buy shares of my company, and that money will come directly to me with which I can do business but in this, my company has benefit because you people will give the money and it will come directly to me but what is the benefit of you people. If you want to buy IPO shares, then the first advantage is that whenever a company comes to the share market and releases its IPO, generally you get the shares at the lowest price at this time, and only after some time does that price go up. Increases by two to three times, let me give you some examples,
Now, The IPO of Route Mobile Limited was released on 21st September 2020, then its issue price was ₹ 300 and a half and now after just 7 days i.e. on 28th September, Its price in 2020 is ₹ 938. That means your money would have tripled in just 7 days. If you had invested Rs 1 lakh, you would have received ₹ 3 lakh within just 7 days. Similarly, The IPO of Happiest Mind Technology was released on 17 September 2020, when its issue price was ₹ 166 and now after 10 days, its price is ₹ 363.
Now the second advantage is that there is price transparency, that is, the price it will get in the city. If it is written in your order document, then the information will be available to both small investors and big investors.
The third related advantage is that whenever a company has released an IPO, then either the company is thinking of expanding itself or is thinking of paying off its loan, so in a way, the company is going to move ahead. There are a lot of chances of the price increasing and the company going bankrupt, so in short the risk is less that your money will be lost and there are a lot of chances that your money will increase a lot, so these are the benefits of buying IPO. But don't buy the IPO of any company blindly, do your research. |
How do I buy IPO Step by Step from Groww?
- First, we will open the Groww App.
- we will go to the IPO area.
- now we will click on the Apply option here.
- now we will click on Apply for IPO.
- now we will select the number of shares.
- it is one lot of 90 if you want two, then it is 180.
- After this, we will check the UPI ID properly and then click on the apply option.
- Now you have successfully applied for your IPO, after this we will go to our UPI app for payment.
- When you open your UPI app, you will see a request.
- The complete request will be visible and you will approve it by entering the UPI PIN.
The IPO of India's second largest housing finance company Bajaj Housing is going to open between September 9 and September 11, whose IPO size is Rs 6560 crore and the price band here has been kept between Rs 66 and Rs 70. This company sells residential and commercial. The company gives loans to renovate or purchase space. The company is also profitable and its GMP is running at ₹ 55. Now if we look at its price band, then it is around 80% but GMP means returns are not guaranteed, so invest in any IPO only after doing the complete study.
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