IPO seasons are the BEST! Almost every investor is excited about IPOs. But Have you ever wondered what`s the thrill behind it? What is an IPO and Why are people interested in buying it? Do you wish to plan an IPO and get it added to your wishlist but are unaware of how it works? Don’t worry! We have got you covered. Some days before we were bombarded with some of the most talked-about IPOs like Nykaa, Zomato, and so on. Well, the retail investors in India are increasing day by day and hence it is under the spotlight.
Let’s break the term IPO!
IPO (Initial Public Offering) means, the process of offering shares of a private corporation to the public in a new stock issuance. Companies must meet requirements by stock exchanges and the Securities and Exchange Commission (SEC) to hold an IPO. Hence for a company to issue an IPO is a tedious process but for an investor, it can be a thrill.
But what’s the hype about?
IPOs can be one of the best things which might happen to an investor if they get it. Why is it so? Some people invest in an IPO for short-term gains that can be “listing gains” when the IPO has got listed and there is a price hike and some wish to keep an eye on the company’s “ground level” which means for a long term gain i.e from the beginning and stick with it for the long term.
Let’s talk about the IPO Allotment
IPO allotment can be Rigged or Random. Here are three situations that can happen at the IPO allotment,
- subscribed at par i.e. shares applied for = shares issued
- undersubscribed in which shares applied for < shares issued and most commonly and our focus for today (on rare occasions)
- oversubscribed where the shares applied for > shares issued
So when the IPO is oversubscribed there’s a lot of shares being demanded over the shares issued to the public by the company. Hence, most of the applicants end up receiving fewer lots or sometimes they get rejected.
What is the upcoming IPO?
Life Insurance Corporation of India is an investment and insurance corporation owned by the Government of India. LIC stands as the only life insurance company in the Indian public sector with an extensive presence in rural and urban areas. It operates through 8 zonal and 113 divisional offices.
As a part of its ambitious disinvestment endeavor, the Central Government aims to list Life Insurance Corporation of India (LIC) by the last quarter of this fiscal year.
The main objectives of LIC IPO are:
- To address working capital requirements
- To meet corporate purposes
How can you increase your ODDs for your IPO Allotment?
- Take it Easy or Say Goodbye
Basically, the applications and bids for IPOs are auctions where investors bid at different prices to the shares being offered. It can also be an affixed price band that has been offered by the company so that investors can bid at a cut-off price.
- Make it Your Family Goal
Most of the time people think of quantity and bid with the highest quantity but the magic is keeping it the lowest and when the IPOs do get oversubscribed there are chances people with less in quantity can get the allotment. And if one wishes to buy a huge quantity then one can fill out the application form from each of the family members’ Demat account. It is said that Angel One is one of India`s Leading platforms as full-service brokers where you can open free Demat accounts.
- Keep the Track Of Time
Trying to beat the clock, the pandemic has not only brought panic and scare but also discipline in one’s life. One always makes sure everything`s in check before time. Because the last-minute delay in any application form can bring unnecessary tension and second thoughts. And if we fall into the trap of glitches then it can be the worst decision and time to fill the form at the end moment. Because it’s understandable that humans can make errors but it’s sometimes not accepted by people that there can be glitches and bugs in the systems too. To avoid unnecessary tension better be before the clock.
It is important to verify all the documents while submitting the records. Because a single mistake of not matching the name from submitted documents to the Pan card can get a big problem and can delay the process unnecessarily.
So, are you excited about the LIC IPO?
Let us know in the comments.