People are not aware of many things related to the stock market, one of them is the term IPO. To get success in the stock market, it is necessary to have knowledge about IPO. That’s why we have told you in this article about what is IPO.
Through this article, we have given you information about what is IPO, what are the types of IPO, how to buy IPO, how to invest in IPO, the benefits of IPO, and the disadvantages of IPO.
If you also want to invest in the stock market, then this article is very important for you, so read this article till the end. So let’s start this article without any delay – IPO Investment.
The full form of IPO is INITIAL PUBLIC OFFERING. Whenever a company gets listed in the stock market and makes its general shares public for the first time, it is called IPO. When companies are listed on the stock market, any investor can buy and sell their shares.
Actually, companies need funds to increase their growth, then they offer some percentage of their share to the general public. Percentage share is available.
Simply put, when a company issues its common stock to the general public for the first time, it is called an IPO. Any company is listed in the stock market through IPO.
The full form of IPO is INITIAL PUBLIC OFFERING, which is called ‘First Public Offer’.
By now you must have got a little idea that what is IPO, now it is also important to know why a company brings IPO.
As we told you above companies issue IPO to raise funds. Both small and big companies issue IPOs.
The main purpose of an IPO is to raise funds for the necessary work and growth of the company. Although companies can also take loans from banks to raise funds, in taking loans, the company has to return the loan amount along with interest to the bank within a certain time interval.
But by issuing shares, companies do not have to return money to anyone. The company is listed in the stock market and issues some percentage of its shares to the general public, and investors buy the company’s shares, due to which the investor gets some percentage of the company’s share and the company gets the funds.
In IPO, both the company and the investor get the benefit. On the one hand, where the company collects funds for itself, on the other hand, the investor becomes the owner of some percentage of the company. A company can take out an IPO more than once.
Some of the main reasons for issuing an IPO are as follows –
There are mainly two types of IPO –
Under fixed price, as the name suggests, a going public company sets a fixed price at which its shares are offered to investors. The investors know the value of the shares even before the company’s stock comes into the market. Because in Fixed Price IPO, the company together with the investment bank determines the price of the share. The investor participating in this type of IPO has to pay the full price of the share at the time of applying.
In book building IPO, companies decide on a price band along with the investment bank. Usually, companies provide up to 20 percent off the price to investors under book building IPO. When the closing price is fixed, then the IPO is issued.
Investors place bids on the shares before the final price is decided. Investors have to specify how many shares they want to buy and how much they are ready to pay.
There is no fixed price per share in book building IPO. The stock which is of lowest price is called Floor Price and the share which is of highest price is called Cap Price.
To earn money from IPO, you have to invest in IPO. Investing in IPO means that your luck is related to the company, the company whose IPO you invested in, if that company progresses, then you will also benefit, but if the company loses then your invested money can also be lost. Huh.
When any company issues IPO, it gives investors 3 to 10 days to invest in IPO. Within this fixed time interval, an investor can buy the company’s IPO. If a company opens its IPO for only 3 days, then someone opens its IPO for investors for more than 3 days.
To invest in IPO, you can also invest by visiting the official website of the company issuing the IPO or you can also buy IPO through a registered broker.
If the company has issued a fixed-price IPO issue, then you will have to buy the IPO at the fixed price only. And if IPO is Book Building then you have to bid in IPO. If you have invested in IPO then share allotment happens only after the closure of the IPO
To invest in IPO, your broker should be the best, initially, you invest in IPO only with the broker. Compare 2 – 3 and other companies with the company whose IPO you want to invest in, invest in IPO only after seeing the progress of the company for a few days.
Upstox App and Groww App are very good for investing in IPO, you can invest in IPO through these applications.
Follow these steps sequentially to buy IPO –
When the opening of the IPO is closed, then the companies do IPO allotment, in this process the company allows the IPO to all the investors and after allotting the IPO, the company’s shares are listed in the stock market.
When the company’s shares are listed in the stock market, they can be bought and sold in the secondary market, unless the shares are listed in the stock market, they cannot be sold. But when the shares are listed in the stock market, then two investors can buy and sell the shares according to the timing of the share market.
This question must also be coming to the minds of many people that what is Secondary Market, so for your information, let us tell you that you can invest in the stock market in two ways. Primary Market and Secondary Market.
In the primary market, you can invest through IPO, and in the secondary market, you can invest in the listed shares in the stock market.
Things to know before investing in IPO
SEBI (Securities and Exchange Board of India) is a government regulator for companies bringing IPO, which makes companies comply with the rules. Companies have to give all types of information to SEBI. Even after bringing the IPO, SEBI checks the company whether the information given by them is correct or not.
The benefits of IPO are as follows –
There are also some disadvantages of IPO such as –
When a company issues its shares to the general public for the first time, it is called IPO.
The full form of IPO is INITIAL PUBLIC OFFERING. This is called the first public proposal.
By the way, IPO is considered a risky investment because people do not have any information related to the progress of the company's shares. However, for those who are beginner investors, investing in IPO can be a good option. Because to make a future in the stock market, it is necessary to have information about IPO. Beginner investors can invest in IPOs with the help of their brokers.
To invest in an IPO, the investor must have a PAN card issued by the Income Tax Department along with a Demat account. Only then can an investor invest in IPO.
Any adult and minor person who has a PAN card issued by the Income Tax Department can invest in an IPO.
Through this article, we have tried to give you complete information about IPO Kya Hai so that you can get basic information about IPO. To make money from the stock market, it is important to know about IPO. Investing in IPO is risky, so you should initially invest in IPO with the help of your broker.
In this article, we hope that you have got useful information about what is IPO and how to buy IPO through this article. If you liked this article, then do share it with your friends on social media too.
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