by How to Identify Good IPO in India has always attracted a lot of investors for example the recent listing of burger king was at a listing gain of 130 percent. it means those who invested rupees 15000 in burger king saw their investment value jumped to rupees 34500 giving rupees 19500 on the first day as profit which’s more than double the return.
Similarly, happiest mind gained 111 percent on the first day so those who got the shares of the IPO were sitting on hundred and eleven percent profit on the first day.
Likewise, Camcomb specialty chemical was listed at a premium of 115 percent over its issue price rosary biotech started the first trading day with a whopping 57.65 percent premium over its IPO price.
Route mobile was listed at 104.86 premium over its issue price naturally this is easy money but it is important to understand that not every IPO would be listed at such high premiums.
There can be a case where the IPO gets listed at lower than the offered price giving a negative return naturally you would like to invest in those companies where you can get high listing gain and you would want to avoid companies that might not give a good listing gain.
How to Identify Good IPO Whether Company can Generate Good listing gains on the First day of Listing?
- I am going to tell you the secret to make quick easy money in an IPO. I will let you know how to shortlist a potential IPO for quick gain.
- let’s get started so there are two options to decide if the company can give good listing gain or not. The first option is to do a detailed analysis of the company where you understand the business of the company its competitive strength key risk future growth prospect of the industry.
- Finally, you check the financials including the historical growth profitability and valuations but that requires a lot of time energy, and knowledge now what if I tell you that you can decide within five minutes if the company would give a good listing gain or not.
- Guys, I am serious you can actually identify in just five minutes whether the company would give good listing gains or not you just need to do three steps.
Step 1: Grey Market Premium
- Let’s look at each step check the grey market premium of the company companies with a good premium in the grey market would give good listing gains.
- For example, the grey market premium of burger king was 85 which means burger king’s price was trading at 85 percent profit before the IPO listing, and what was the result on a listing day it was launched at the premium of 130 percent.
What is Grey Market Premium?
- A grey market is a place where company shares is bid and offered by traders unofficially this takes place before the shares are even listed or issued by the company on an initial public offering.
- It is an unofficial market please note that it is not illegal it is completely legal since this is an unofficial market there are no rules and regulations.
- Market regulators like Sebi are not involved in this transaction so the first step would be to check the grey market premium you can simply google the name of the company and use the keyword grey market premium and you will get the details.
- For example, if you simply search burger king grey market premium then you will get various links so you can click on the various links and see the grey market premium, for example, if we click on this you can just scroll down and you can see that it says that as expected the price band is fixed at 59 to 60 so we can expect a good grade market premium for the IPO.
- The grey market started with a good note around 28 to 30 and going up and settled around 40 to 45 level likewise there is Zomato IPO that is in progress. So if you just search Zomato grey market premium you can see various links.
- You can click on that link you can see it says Zomato share for commanding a grey market premium.
Step 2: Brokerage House Report
- Check the brokerage houses report now there are many brokerage houses that suggest if you should subscribe to the IPO or not.
- You just need to search the company name and use keywords like brokerage house report or you can be even specific.
- For example, some of the common brokerage houses include Motilal Oswal, Icici security and angel brooking, iifl etc.
- You can type the company name followed by the brokerage house name these are the companies that do the in-depth analysis and provide recommendations.
- If the majority of brokerage house suggests a buy then there are high chances for the listing gain.
- If you simply search burger king IPO broker report then you will get various links so you can scroll down and see for example here in this particular economic times article.
- If you click on this you will see various brokerage house recommendations, for example, has said subscribe, ICICI security said subscribe.
Final Step: Check IPO Subscription Status
This is the final step you need to do where you can check the subscription status during the three days of IPO application so normally if the company is expected to do well there would be a good subscription on the first day itself you will get three days to apply for the post you can invest on the second or the third day on the basis of IPO subscription status.
The more the subscription the better would be the listing gain chances again you can simply google the company name followed by the keyword IPO subscription status and you will get the details so if you simply google let’s say happiest mind IPO subscription status then you can see various links now if you scroll down you can read happiest mind IPO subscribed over 150 times.
Likewise you can search let’s say indigo paints IPO subscription and if you scroll down you can see that it says indigo paint IPO subscribe over 50 times o far on final day.
Conclusion
If we conclude for the IPO to give potential listing gain it should have a high-grade market premium subscribe rating from multiple brokerage houses and finally high subscription during the three days of IPO application.
Guys there are many potential companies lined up for the IPO in 2021. Some of the potential names include Zomato, Policy Bazaar, Paytm, Flipkart, Nika etc.
Next time you apply for the IPO make sure that you apply these three steps that we discussed in this article but there is only one problem if an IPO has a high grey market premium and multiple subscription call from various brokerage houses there will be multi-fold subscription for the IPO during the three days of application window.
In that case it would be a lottery system so higher the subscription lower would be the probability of you getting the allotment but there is no harm in trying the luck isn’t it by the way if any one of you know the secret formula to get the allotment lottery in case of multiple times subscription then please share it in the comment box and did you make a good profit in previous IPO allotment do let me know in the comment box.
Finally please note that this formula is only to identify the IPO with potential listing gain. It is not for the long term investment for long term investment you need to do the fundamental analysis and this article is only for educational purpose please consult your financial advisor before investing your money.
One should follow the Risk Management, Money Management, and Fear and Greed concept of the market to avoid big losses.
if you like this post kindly leave a comment in the comment section so that we can know what your thought about these Retail Investors Lose Money in the Stock Market. For more trading ideas do follow us on
