What is an IPO?
An initial public offering (IPO) is the first time that a company offers its shares to the public. This allows the company to raise capital from investors and to become a publicly traded company.
How does an IPO work?
The process of an IPO typically involves the following steps:
- Company hires an investment bank to underwrite the IPO. The investment bank helps the company to set the price of the shares and to market the IPO to investors.
- Company files a registration statement with the Securities and Exchange Board of India (SEBI). The registration statement discloses information about the company, such as its financial statements and its business plan.
- SEBI reviews the registration statement and may require the company to make changes.
- IPO is offered to investors through a process called book building. During book building, the investment bank gathers information from investors about how many shares they are interested in buying and at what price.
- IPO is priced and the shares are allocated to investors.
- Shares are listed on a stock exchange and begin trading.
History of IPOs
The first IPO is believed to have taken place in the Netherlands in 1602, when the Dutch East India Company (VOC) offered its shares to the public. The VOC was a trading company that operated in the Far East. It was the first company to issue shares that were traded on a stock exchange.
IPOs became more common in the 19th century, as the Industrial Revolution led to the growth of new businesses. In the United States, the first IPO was the sale of shares of the Bank of the United States in 1791.
IPOs have continued to grow in popularity in recent years. In 2021, there were over 2,000 IPOs worldwide, raising a total of over $2 trillion.
Advantages and disadvantages of IPOs
There are several advantages to an IPO for a company. First, it allows the company to raise capital to fund its growth.
Second, it provides the company with access to a wider pool of investors.
Third, it gives the company a public market valuation, which can be used to attract strategic partners or to make acquisitions.
However, there are also some disadvantages to an IPO. First, it can be a costly process. Second, it can dilute the ownership of existing shareholders. Third, it can make the company more susceptible to public scrutiny.
Investing in IPOs
Investing in IPOs can be a risky proposition. The shares are often priced high and there is no guarantee that they will rise in value. However, there are also the potential for high returns.
If you are considering investing in an IPO, there are a few things you should keep in mind:
- Do your research. Make sure you understand the company and its business model.
- Only invest money that you can afford to lose.
- Be patient. IPOs can be volatile and it may take some time for the shares to appreciate in value.
Performance of an IPO
The performance of an IPO can vary widely. Some IPOs have been very successful, while others have been disappointing. There are a number of factors that can affect the performance of an IPO, such as the overall market conditions, the quality of the company, and the price at which the shares are offered.
SEBI Regulations and Investor Protection
The Securities and Exchange Board of India (SEBI) regulates IPOs in India. SEBI has a number of rules and regulations in place to protect investors, such as requiring companies to disclose detailed information about themselves and their businesses before they can go public.
Comparing Indian IPOs with Global Trends
The Indian IPO market has grown rapidly in recent years.
The Indian IPO market is still relatively small compared to the global IPO market. However, it is growing rapidly and is expected to continue to grow in the coming years.
Here are some of the key differences between Indian IPOs and global IPOs:
- Indian IPOs are typically priced lower than global IPOs.
- Indian IPOs are more likely to be oversubscribed.
- Indian IPOs are more likely to be driven by retail investors.
- Indian IPOs are more likely to be in the technology sector.
Overall, the Indian IPO market is a vibrant and growing market. It offers a number of investment opportunities for both domestic and international investors.
Upcoming IPO in India
The Ratnaveer Precision Engineering Limited IPO
The Ratnaveer Precision Engineering Limited IPO is a public offering of 16,840,000 equity shares of face value ₹10 each.
The price band for the IPO is ₹93-98 per share. The issue opens for subscription on September 4, 2023 and closes on September 6, 2023. The shares are proposed to be listed on the BSE and NSE.
The net proceeds from the IPO will be used to fund working capital requirements of the company, and general corporate purposes.
Ratnaveer Precision Engineering Limited is an engineering company engaged in the manufacture of stainless steel products. The company’s products are used in a variety of industries, including automotive, solar energy, wind power, oil & gas, pharmaceuticals, and instrumentation. The company has a strong track record of growth, with revenue and profit increasing at a CAGR of 14.73% and 16.40% respectively, over the past 10 years.
The IPO is being managed by Unistone Capital Private Limited and Link Intime India Private Limited.
The grey market premium (GMP) for the IPO is around ₹10 per share. This means that the shares are trading at a premium of ₹10 over the upper end of the price band.
The IPO is expected to be a good investment for investors who are looking for exposure to the growing stainless steel industry. The company has a strong track record of growth and a good management team. However, investors should do their own due diligence before investing in the IPO.
Here are some of the key details of the IPO:
- Issue size: 16,840,000 equity shares
- Price band: ₹93-98 per share
- Opening date: September 4, 2023
- Closing date: September 6, 2023
- Listing date: September 14, 2023
- Lead managers: Unistone Capital Private Limited and Link Intime India Private Limited
The Pramara Promotions Limited IPO
The Pramara Promotions Limited IPO is a public offering of 2,424,000 equity shares of face value ₹10 each. The price band for the IPO is ₹63-65 per share. The issue opens for subscription on September 1, 2023 and closes on September 5, 2023. The shares are proposed to be listed on the NSE SME.
The net proceeds from the IPO will be used to fund working capital requirements of the company, and general corporate purposes.
Pramara Promotions Limited is a promotional products company engaged in the ideation, conceptualization, designing, manufacturing, and marketing of promotional products and gift items.
The company’s products are used by a variety of clients, including FMCG, QSR, pharma, beverage companies, non-alcoholic and alcoholic, cosmetic, telecom, media, and others.
The company has been in operation for over 10 years and has a strong track record of growth. Revenue and profit have increased at a CAGR of 15% and 18% respectively, over the past 3 years.
The IPO is being managed by Axis Capital and ICICI Securities.
The grey market premium (GMP) for the IPO is around ₹5 per share. This means that the shares are trading at a premium of ₹5 over the upper end of the price band.
The IPO is expected to be a good investment for investors who are looking for exposure to the growing promotional products industry.
The company has a strong track record of growth and a good management team. However, investors should do their own due diligence before investing in the IPO.
Here are some of the key details of the IPO:
- Issue size: 2,424,000 equity shares
- Price band: ₹63-65 per share
- Opening date: September 1, 2023
- Closing date: September 5, 2023
- Listing date: Tentative: September 13, 2023
- Lead managers: Axis Capital and ICICI Securities
The Basilic Fly Studio Limited IPO
The Basilic Fly Studio Limited IPO is a public offering of 6,840,000 equity shares of face value ₹10 each. The price band for the IPO is ₹92-97 per share. The issue opens for subscription on September 1, 2023 and closes on September 5, 2023. The shares are proposed to be listed on the NSE SME.
The net proceeds from the IPO will be used to fund working capital requirements of the company, and general corporate purposes.
Basilic Fly Studio Limited is a digital marketing company engaged in the provision of digital marketing services, including search engine optimization (SEO), search engine marketing (SEM), social media marketing, and web designing. The company has a strong track record of growth, with revenue increasing at a CAGR of 30% over the past 3 years.
The IPO is being managed by Equirus Capital and ICICI Securities.
The grey market premium (GMP) for the IPO is around ₹20 per share. This means that the shares are trading at a premium of ₹20 over the upper end of the price band.
The IPO is expected to be a good investment for investors who are looking for exposure to the growing digital marketing industry. The company has a strong track record of growth and a good management team. However, investors should do their own due diligence before investing in the IPO.
Here are some of the key details of the IPO:
- Issue size: 6,840,000 equity shares
- Price band: ₹92-97 per share
- Opening date: September 1, 2023
- Closing date: September 5, 2023
- Listing date: Tentative: September 13, 2023
- Lead managers: Equirus Capital and ICICI Securities
Conclusion
IPOs represent a significant step for companies seeking growth and expansion opportunities.
Understanding the IPO process, valuations, investor strategies, and the regulatory framework is crucial for anyone interested in the stock market and investing in newly listed companies.
By staying informed and making well-researched decisions, investors can navigate the exciting world of IPOs with confidence.
Remember that investing in IPOs involves risks, and it’s essential to consult with financial experts before making any investment decisions. Stay tuned for more insightful content on our blog as we continue to explore the ever-evolving landscape of IPOs and investments in India.
