MY IPO EARNINGS, WHAT YOU SHOULD DO TO BENEFIT FURTHER

 

  

Hello everyone

I think IPO is one of the best way for a novice who wish to start his journey to invest in equity market. Reason being:-

Low Capital Requirement – For purchasing 1 lot of equity shares issued by the companies generally the investment requirement is below Rs 15,000.

Reading Material Available – When the companies go for public listing, a red herring prospectus is filed with SEBI wherein the company discloses information such as purpose of the issue; disclosure of any option agreement; under writer's commissions and discounts; promotion expenses; net proceeds to the issuing company (issuer); balance sheet; earning statements for last 3 years; names and address of all officers, directors, underwriters and stockholders owning 10% or more of the current outstanding stock; copy of the underwriting agreement; legal opinion on the issue etc

Further a lot of news, details about the company ipo floats in internet 15-20 days before IPO.

So Investor has a lot of information available after due understanding of which, he can take further investment decision whether to invest or not.

SAFEST WAY TO ENTER- Among the various forms of transactions like intraday trading, derivatives trading, short term trading and Long term investing, IPOs helps in developing habit of Long term investing .

Many people have made their fortunes by investing for long term and many have lost their whole wealth in intraday and derivatives trading.

So sincere request for every newbie to stay away from derivatives and intraday trading with excess margins provided by brokers and rather start with small capital and opt for long term investing or swing trading.

 

Now coming back to the topic about my ipo journey and its earnings.

I opened my demat account in 2016, my first ipo allotment was in 2018 and the company name was Cochin Shipyard Ltd. This IPO gave me a listing gain of 36.80% and in absolute terms profit was Rs 4537. My investment was Rs 12,330 and sold it on listing day for Rs 16,867, time period approx. 15 days.

So from here onwards my journey for investing in ipo started.

How does IPO works :- Lets take example of this recently listed company where within 12 days it completed the whole process from opening IPO for public, finalizing allotment to finally crediting share to demat account of applicant.

Harsha Engineers IPO Opening Date for subscription	Sep 14, 2022
Harsha Engineers IPO Closing Date for subscription	Sep 16, 2022
Basis of Allotment	Sep 21, 2022
Initiation of Refunds	Sep 22, 2022
Credit of Shares to Demat	Sep 23, 2022
Harsha Engineers IPO Listing Date	Sep 26, 2022

 

 

 

 

Company went for IPO to issue Rs 755 crore worth shares out of which Rs 300 crore would go to bank account of existing promoters(offer for sale) and Rs 455 crore would go the bank account of the company(Fresh issue).

There are certain quota reserved for NII, RII and QIB investors. The quota reserved for NII, RII and QIB are as follows:

NII- 15% of the issue (113.25 crores) oversubscribed  by 71.32 times

RII -35% of the issue (264.25 crores) oversubscribed  by 17.63 times

QIB-50% of the issue (375.50 crores) oversubscribed  by 178.26 times

 By oversubscription it means for every 1 share under respective category investors has applied for 71, 17 and 178 shares. This means investors are pretty much confident about the future prospects of the company and willing to invest their capital.

Also the GMP of the share is Rs 165 which is 50% at cmp of Rs 330 per share.

This means the share might list at Rs495 (330+165).

 

Modus Operandi To Benefit Further :-

1. Open Demat account for all the family members in your family.

2. Recommended to have internet banking in all the savings account of family members.

3. By applying through internet banking, one can use ASBA feature to block the amount from saving account and the amount gets deducted from bank account only if allotment is made to the applicant.

4. Search upcoming ipos in Google, and have a list of IPOs coming in near future.

5. Check company history, business background, future prospects, and financial statements then take a wise decision whether to invest or not.

6. Check Grey market premium of the issue from https://www.chittorgarh.com/ipo/ipo_dashboard.asp . Grey market premium changes everyday.

7.  I prefer this website before applying any ipo.

On last day of subscription I check the GMP and oversubscription in retail category to finalise my decision to invest in a particular ipo.

8. Currently I am applying through 8 different demat accounts including HUF. I will be sharing a separate article regarding benefits of HUF.

It’s not always a rosy picture to buy shares through ipo and book profits. Sterling and Wilson was my worst buy in IPO in the past still I am holding the same and hesitant to book loss.

This is the normal tendency of traders, they book small profits and hold larger loss making stocks.

Attaching herewith my profit/ loss in past 4 years, so that you can get an idea of my earnings and plan your future investments in Equity Market through IPO.

 

NAME OF SHARE	PURCHASE DATE	BUY VALUE	SALE DATE	SALE VALUE	PROFIT/ LOSS	ABSOLUTE RETURN IN %
COCHIN SHIPYARD	11-08-2017	12,330.00	12-08-2017	16,867.00	4,537.00	36.80
ICICI GENERAL INSURANCE	27-09-2017	14,542.00	28-09-2017	14,840.00	298.00	2.05
ROUTE MOBILE	17-09-2020	14,000.00	17-09-2020	28,516.00	14,516.00	103.69
GENERAL INSURANCE CORP	24-01-2018	13,872.00	31-01-2018	13,659.00	-213.00	-1.54
HDFC AMC	03-08-2018	14,300.00	06-08-2018	23,335.00	9,035.00	63.18
RVNL	10-04-2019	14,820.00	16-04-2019	19,719.00	4,899.00	33.06
HERANBA	03-03-2021	14,421.00	05-03-2021	19,745.00	5,324.00	36.92
RAILTEL	25-02-2021	14,570.00	26-02-2021	17,900.00	3,330.00	22.86
ROUTE MOBILE	17-09-2020	14,000.00	17-09-2020	28,668.00	14,668.00	104.77
SBI CARD	12-03-2020	14,350.00	06-07-2020	13,028.00	-1,322.00	-9.21
ABSLAMC	07-01-2021	14,240.00	11-01-2021	14,187.71	-52.29	-0.37
CLEAN	15-07-2021	14,400.00	19-07-2021	25,518.24	11,118.24	77.21
SHYAMMETL	22-06-2021	13,770.00	29-06-2021	16,253.43	2,483.43	18.04
GENERAL INSURANCE CORP	24-01-2018	13,837.00	31-01-2018	13,872.00	35.00	0.25
HDFC AMC	03-08-2018	14,300.00	06-08-2018	23,295.87	8,995.87	62.91
POLYCAB	15-04-2019	13,450.00	16-04-2019	16,161.00	2,711.00	20.16
HAL	26-03-2018	14,880.00	06-07-2020	9,989.00	-4,891.00	-32.87
CHEMCON	30-09-2020	14,960.00	01-10-2020	26,578.00	11,618.00	77.66
NAZARA TECHNOLOGIES	25-03-2021	14,313.00	01/04/2021	21,288.80	6,975.80	48.74
SHYAM METALLICS	23-06-2021	13,770.00	29/06/2021	16,429.50	2,659.50	19.31
VIJAYA DIAGNOSTICS	23-06-2021	14,868.00	14/09/2021	16,282.00	1,414.00	9.51
SBI CARD LTD	12-03-2020	14,345.00	06-07-2020	11,545.00	-2,800.00	-19.52
SW SOLAR (UNREALISED LOSS)	06-08-2019	14,820.00	NA	5,949.00	-8,871.00	-59.86
SW SOLAR (UNREALISED LOSS)	06-08-2019	14,820.00	NA	5,949.00	-8,871.00	-59.86
HARSHA ENGINEERS	24-09-2022	14,850.00	26-09-2022	21,870.00	7,020.00	47.27
TOTAL		3,65,418.00		4,54,075.55	88,657.55

To sum up this article, I would like to add that I had applied for many IPO’s but got allotment only in few. The ratio might come around 80 : 20 despite applying from all accounts. So getting allotment is the key and that is done on pro rata   basis in case of oversubscription. I usually sell shares on listing day and book listing gains.

 

ENHANCE YOUR VOCABULARY :-

NOVICE :- A person who is new and without experience in a certain job, situation, etc

SWING TRADING:- Swing trading involves taking trades that last a couple of days up to several months in order to profit from an anticipated price move.

GREY MARKET PREMIUM :- The premium at which the IPO shares are traded in the grey market.

 

NII :- Non Institutional Investors

RII :- Retail Individual Investors

QIB :- Qualified Institutional Buyers

 

Reading material :-

1.https://www.chittorgarh.com/faq/how_grey_market_works/78/

2. https://www.chittorgarh.com/report/ipo-in-india-list-main-board-sme/82/

 For any suggestion or queries you can reach out to me at caakshatmodi@gmail.com or at 9028912025.

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Disclaimer :- This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.