Rohit* started investing in its own capital with long -term access, but soon moved to the IPO market, tempted by faster returns. For any IPO, just from the date of the regulation, only three working days lasts. Rohit realized that it was a golden chance to turn capital for short -term returns. His faith was strengthened when he saw more IPO generates a steep return on the date of the listing itself. He was leaning with short -term paybacks and began to apply for almost all IPOs.
Within a few months, however, he announced the problem – he did not receive the assignment in IPO, which brought a big return on the day of the listing, but instead gained assignment for those generated by nominal return or even losses on the day of the listing. He continued to hold such shares in the hope that he would sell them later for the price. However, the losses in these supplies have expanded. After six months he became frustrated when he saw heavy losses in his IPO portfolio, despite several IPOs that create excessive yields in the same period.
Rohit is not alone. In my interactions with retail investors, I observed the same outlets – investors do not receive profitable IPOs and IPO allocated nominal gains or daily losses.
It is always difficult to obtain allocation in high -quality IPO, because quality companies coming to fair valuation always tend to be excessive. If institutional investors offer IPOs through a qualified institutional buyer (QIB) or anchor investors’ routes, the chances of assignment are higher because companies often reserve a significant part of the shares (50-75%) for the QIB in IPO to use their great capital, expertise and market credibility. However, this path is intended for institutional investors, such as alternative investment funds, mutual funds and banks.
For retail investors, no matter what method they use for use, allocation in cases of excessive questions will always be a question of happiness. Therefore, one must not be kidnapped by hype, but to stick to a systematic approach:
Be specific in order to
If you focus on short -term revenues through daily profits, then sell the day the listing itself, regardless of profit or loss. The reason is simple: the IPO they report below the ongoing price often decreases. The longer you hold, the greater your disappointment.
Always dig deeper
IPO is usually a means of raising funds for a promoter – either for business growth or for partial exits occasionally. So it is natural that promoters project pink business prospects during IPO. It is necessary to read between the lines.
Carries you by listing profits
Despite the profits on the daily day, many IPOs will prove to be a destructor of wealth. During 2024 and at the beginning of 2025, more IPOs were 90% above their emission price, but currently trades 20-30% lower, causing an incredible 60% -70% loss to those investors who bought the statement on the day.
So do not invest in shares with a look at the IPO overcription numbers and daily listing.
Focus on the basics
Whether it is an IPO or the company listed on the list, it is the basics that control shares prices in the long run. It is true that many IPOs destroyed the investor’s wealth for some time. However, there are also examples of excessive yields.
In January 2025, the pharmaceutical company listed for 90% of the premium of its emission price and is currently trading 420% over the issued price. The company has a good foundation with more than 20% return on equity and the return on employed capital, good cash flow, libopheic deliberation and high growth potential. Investors must seek strength in the balance sheet, growth prospects, valuation and long -term sustainability of growth, short -term IPO performance instructions.
Overall, retail investors should not rush to invest in an IPO based only on a hype on a non -created market or on the Gray Market bonus. If you are looking for short -term daily occasions, be sure to close the position on the listing itself regardless of profit or loss.
For medium to long -term investment opportunities, however, investors should look for the hype per day. The company with strong foundations and strong long -term prospects for growth will provide several access options as soon as the madness ends in the list.
Remember, in the end, long -term creation of the value of sustainable growth functions without emphasizing the balance sheet is.
*This is a hypothetical box
Prasenjit Paul is an analyst of Paul Asset and a fund manager of 129 Wealth Fund, an alternative investment fund category III registered by Sebi.
(Tagstranslate) IPO Market (T) Equity Investing (T) Short-Term Returns (T) Listed Day Gains (T) Retail Investors (T) IPO Investing (T) Allotment (T) (T) Risk Prospects
