As a wonderful exit strategy for the promoters and founders of the company, IPO helps in realizing the full potential of private investment. Depending on the pricing of the issue, market sentiment, company reputation, and various other aspects, an IPO can be oversubscribed.
Ideally known for their volatile opening day returns, IPOs generally attract a lot of investors who regularly deal in share trading. An IPO can be subscribed to with the help of a trading account & demat account. (
Benefits of investing in an IPO
- Be the early bird
When an investor enters a company at a ‘base level’, he can be sure to see all the ups and downs that the company will go through and also find various opportunities to generate wealth in the long run.
- Align your growth with the company’s growth
For an informed investor, IPOs are a great opportunity to avail the benefits of the company’s expansion while aligning their growth with the company’s growth. As a transparent form of investment, IPOs are essential to be subscribed so that your investment portfolio diversifies and better growth opportunities can be experienced over a period of time.
How to invest in an IPO
Step 1: Open a Share Trading and Demat Account.
Step 2: Subscribe to the company’s shares in the amount of lots required through your trading account using the Application Supported by Blocked Account (ASBA).
Step3: If the shares are allotted to you after the bidding process, you will be notified. If not, the amount will be credited back to your bank account.
IPOs are a great option to subscribe for shares of various companies before they get bigger and gradually expensive. Once you invest, sit back and enjoy the game for a long-term while many factors influence the share price and you reap the benefits from them. By investing at a crucial stage of an IPO, an investor can get an opportunity to own stakes in a promising company and yield the benefits of dividend as well.
There have been various instances where investors have had to regret for missing the opportunity of subscribing to an IPO. In fact, most multi-bagger stocks today were the great IPOs of yesterday. Quality IPOs may perform well in the long run. Hence, in terms of long-term prospective, IPOs can be looked upon as a good investment.
Remember that not all IPOs and companies perform well but once you have found your match and are willing to hold for a longer period of time, you can be convinced that long-term growth is inevitable. An investor should understand that no investment is risk free. Thus, increasing the risk appetite and keeping a close watch on the upcoming IPOs can help investors get the desired returns over a longer period of time.
The year 2021 has definitely been the year of IPOs with Kalyan Jewellers India Limited, Nazara Technologies Limited, Barbeque Nation Hospitality Limited, Zomato and many more amongst the league getting listed on the stock exchanges while Nykaa, GoAir, India Pesticides and others being in the pipe-line.
It is a genuine opportunity for all investors to grab at the right time and make wealth over the long-term horizon. Read the prospectus of the company carefully, decide on your funding requirements and invest wisely because IPOs are surely not to be missed. Stay invested, stay diversified and you will not have to worry about your long-term growth.