Introduction:
With growing awareness in capital market investment, IPO market in India is alsobooming. Themarket has by far witnessed many restructuring and reforms which gradually has made it popular amongst investors. Therefore, it is important to understand what all are needed to check before making a selection.
Investors, in general case, get an opportunity to pick a potentially underpriced stock and profit from a jump on the listing day or with the due course of its journey in the secondary market. Information can be sourced either from the National Stock Exchange (NSE) platform, or from the Bombay Stock Exchange (BSE) platform. IPO watch is another place which is specifically dedicated to IPO related information.
Certain IPO Investment Metrics:
·IPO Size:
It is the total number of equity shares of a brand or a firm being offered to the public.
·Price Band:
It is the upper and lower limit of a share price while the Company goes public. In between this cap and floor, buyers are able to bid. The range is majorly factored by the growth prospectus of the Company, Industry (which it belongs to), and the Economy. Other major contributors are: firm’s net worth and earnings per share.
·Minimum Order Quantity and Market Lot Size:
While the bare minimum number of shares that an investor is needed to purchase to secure the IPO investment denotes the minimum order quantity, the market lot size comprises the total number of shares coming in a lot. From these two parameters, how big or small the Company is can be determined.
·DRHP Document:
DRHP abbreviates for Draft Red Herring Prospectus. It is a preliminary registration document prepared by the merchant bankers for prospective IPO making Companies. The document clarifies why the Company wants to raise money, how the money will be utilized, and the risk elements involved in the investing.
·Allocation for Retail Investors:
Retail investors are the individual investors who manage their own money and do not invest on someone else’s behalf. As per SEBI mandate, the quota for retail allocation is maximum up to 35%. If an issue is oversubscribed, subject to availability, all retail investors would be allotted to at least one lot. If ‘one lot to each investor’ is not possible, a lottery system will take place for share allocation.
IPO Calendar: Forthcoming IPOs
Aditya Birla Sun Life AMC:
The asset management firm received approval from SEBI to raise funds through an Initial public offer in the last week of September. The asset management company is jointly promoted by Aditya Birla Capital and Sun Life (India) AMC investments. These promoters will together sell their stake of upto 3.88 crore equity shares. Aditya Birla Capital plans to sell upto 28.51 lakh equity shares and Sun Life AMC will sell upto 3.6 crores equity shares. The IPO is expected to fetch Rs.1,500 to Rs.2, 000 crores,
Life Insurance Corporation of India (LIC):
State owned life insurance giant LIC plans to raise the largest public offering in India. It is the most sought-after IPO listing and it is expected to happen in two parts this year. The government of India holds a 95% stake in LIC. Through the sale of the stake, it expects to raise around 90,000 crores. The government said that proceeds from this sale will go towards the reduction of the annual budget deficit.
Fincare Small Finance Bank:
Bengaluru based microfinance firm turned small finance bank, plans to raise Rs.1330 crores via an IPO. The IPO consists of issue of fresh equity shares worth Rs.330 crores and the promoter, fincare business services plan to sell their stake of up to Rs.1000 crores.The Bank will use the funds to increase its Tier-1 capital base to meet further capital requirements. Tough the bank filed its IPO papers in May this year, the company has said its board can wait well till FY2023-2024 for the listing.
Bajaj Energy:
Thermal generation provider, Bajaj energy plans to raise an IPO this year. The issue size is Rs.5,450 crores out of which Rs.5,150 crores is fresh issue of shares and Rs.300 crores is an offer for sale. The proceeds of the sale are for payment of all outstanding borrowings and to buy shares of Lalitpur power generation corporations.
Go Air (Go first):
The ultra-low-cost carrier’s IPO is expected to hit markets this month. The company that recently rebranded itself as “Go First” plans to raise about Rs.3600 crores all via fresh issue of shares. The proceeds will be used to repay a debt of Rs.1,780 crores, replace letters of credit and other liabilities with Indian Oil Corporation.
Conclusion:
Many investors are lured by IPOs. But how an IPO performs iscompletely dependent on the market sentiment on that day. Making a prudent purchase call needs deep understanding about the company, its product or service portfolio, the key stake holders, their competitive advantage, all the financials in terms of revenue/expense/margin etc. coupled with historical advantages. Looking for how the potential sectors and the corresponding lead players are performing will give a comprehensive picture, which – in turn – will guide better for IPO selection.
Disclaimer: ICICI Securities Ltd.( I-Sec). Registered office of I-Sec is at ICICI Securities Ltd. - ICICI Centre, H. T. Parekh Marg, Churchgate, Mumbai - 400020, India, Tel No : 022 - 2288 2460, 022 - 2288 2470. Please note, IPO related services are not Exchange traded products and I-Sec is acting as a distributor to solicit these products. All disputes with respect to the distribution activity, would not have access to Exchange investor redressal forum or Arbitration mechanism. The contents herein above shall not be considered as an invitation or persuasion to trade or invest. I-Sec and affiliates accept no liabilities for any loss or damage of any kind arising out of any actions taken in reliance thereon. Investments in securities market are subject to market risks, read all the related documents carefully before investing. The contents herein mentioned are solely for informational and educational purpose.
Disclaimer: No Deccan Chronicle journalist was involved in creating this content. The group also takes no responsibility for this content.
