October 21, 2010 8:32 am
Is IPO a good way to invest in Equity?
Let’s discuss & reach some conclusion for benifit of all readers.
is investing in insurance IPO a wise decision ?
There is no YES or NO for this.
Its like stock investing. You never know if it will be in profit or loss.
@milind and@ hemant
i am not answering the question, but i like to know what is ‘ Invest in the company who’s business you undertsand’! probabley it is warren buffet’s principle of investment. but when i am thinking, i am realising that i am not understanding business of any company ! at the most i can understand the accounts etc. of the company.
I think IPO is a good way to invest, only thing is you have to carefully select the companies where you are going to invest. For example PSUs are generally good. Invest in the company who’s business you undertsand, check who are the promotors and check the long term prospects of the sector in which the company in doing the business.
Now everybody can Invest in IPO’s just by seeing the Grading done by Credit Rating Agencies from 1 to 5 , Invest where grading is done 4 or 5. You will earn good amount on your investment. Avoid lower grading IPO’s . SEBI has done great Job by this grading system. You can expect 80 % accuracy in this grading system. Its great help for small & retail investors, who does not know the Financial & Fundamentals of the new company.
Well, I consider IPO to be more riskier than listed equities because their is no “past/history data” to take a decision. Being a private company, their disclosure is not as exhaustive as a public company.
Reliance Power would be one of the best fitting example to depict what I’m trying to say, It was overly subscribed and people expected to make a killing on listing gains but then it tanked on day 1 itself and despite issue of bonus shares, it never reached it’s IPO offer price.
Having said that, I’m not saying IPOs are bad. I have made good money (and lost as well) in IPOs. Like any other equities, IPOs also need to be well analyzed before investing. To certain extent, it is similar to NFOs of Mutual fund.
Funda is very simple… its better to avoid a good issue rather than apply for a bad issue.
Another tip is: please take this in a lighter note. Watch SP. TULSIAN view if he says apply don’t apply and vice versa… u will make profit.
I think so Hemant…. as I have made money in most of the IPO.
Some of the IPO were I made money: Mundra Port, EIL FPO, VA TECH, ASHOKA BUILDERS, TECHPRO, Lanco Infratech, ICICI FPO, REC, POWERGRID etc….
IPO’s were I made loss : NHPC, FEIM INDUSTRIES, MANAKSIA INDUSTRIED, EROS INTERNATIONAL
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