IPOs - issued price & other details

The year 2021 was a landmark year for IPOs or Initial Public Offerings in India, with a total of 1.2 lakh crores or trillion rupees being raised by 63 companies. This exemplary feat made 2021 the best year of IPOs, in a period of 20 years. In comparison, the negative sentiment in the market, and fears of a global recession, made 2022 a lacklustre year for IPOs with companies raising only a total of 57,000 crore rupees in the 12-month period [1]. If you are looking for the recently listed IPOs in India, and want a ready reckoner on the aspects of IPOs, here is a lowdown on the market.

What are the recently listed IPOs?

As the term suggests, recently listed IPOs are companies which have been listed on stock exchanges, such as the Bombay Stock Exchange or the National Stock Exchange, in the recent past. To arrive at this stage, the company has to undertake various steps, such as the bidding period, the allotment of shares and then, the listing. Based on the grey market, and the demand for the IPO, recently listed IPOs can be listed at either a premium (higher than the issue price) or a discount (lower than the issue price).

What happens when IPO is listed?

When a company’s IPO is concluded successfully, the company gets listed on the indices, meaning that its shares become available for trading in the stock market. Therefore, when an IPO is listed, investors and stock traders have the ability to buy or sell shares, in the open market. Further, for IPO investors, the listing day is an excellent opportunity to exit the market, either with a profit or with a limited loss.

How recently listed IPO's share price is discovered on listing day?

Now, you might wonder how the company decides the share price on listing day. Well, on listing day, the share price is discovered through a price discovery session or 'Call auction', which is conducted an hour before the start of the regular trading session. The weighted average price of the shares, in the call auction, is considered the base on which the circuit filter is calculated upon the beginning of regular trading on the listing day.  

What is listing gain?

As an investor, would you invest in an IPO if you thought the listing price would be below the IPO price? Surely, the answer would be negative. Well, when you invest in an IPO, you take this step with the hope of making listing gains, which is the opening price of the IPO, after subtracting the cut-off price at the time of allotment. For instance, if the cut-off price, at allotment, was 150 rupees, and the stock listed at 200 rupees, then your listing gain will be 50 rupees.

Can I sell IPO shares on listing day?

You can trade IPO shares on listing day, to make listing gains or limit your losses if the IPO lists at a discount. On listing day, you have the opportunity to both buy or sell shares, based on your market outlook and the performance of the market. This can be done by logging into your investment application and placing a sell order for all or a part of your shares.

IPO performance

The term IPO performance refers to how the recently listed stock performs, in comparison with its promotion by investment banks. For instance, you may have noticed some IPOs which overhyped their potential, only to list at a discount. Therefore, the manner in which an IPO performs, when compared to its suggested potential, is known as IPO performance.

[1] https://groww.in/blog/ipo-performance-in-india

How to check IPO performance

You can check IPO performance by logging into your investment application and undertaking a comprehensive review of IPOs, including the ones that have been recently listed, those which are currently underway, the ones which are upcoming, and the ones which have been closed in the recent past but are yet to be listed. For ongoing IPOs, you can check the performance by looking at the subscription status. To check the performance of closed IPOs, you can review the accurate insights offered by your app.

How to apply for IPO?

You can apply for IPOs by logging into your app, going to the IPO section, and choosing the current IPOs. Here, you will find the lot size and investment amount. Choose the number of lots you wish to apply for, add a payment method and click on submit. Once your bid is placed, your app will send you a mandate notification to block funds in your account, in case your bid is successful. Approve the request and wait for the allotment period.

Investing in an IPO is a simple and easy process, but you should only invest after thorough research and analysis. You can also invest in various mutual funds that invest in stocks of recently listed companies. Edelweiss MF have a fund named Edelweiss Recently Listed IPO Fund which is an open-ended equity scheme following investment theme of investing in recently listed 100 companies or upcoming Initial Public Offer (IPOs).

An investor education initiative by Edelweiss Mutual Fund

All Mutual Fund Investors have to go through a one-time KYC process. Investors should deal only with Registered Mutual Fund (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit - https://www.edelweissmf.com/kyc-norms  

MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS. READ ALL SCHEME-RELATED DOCUMENTS CAREFULLY