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16 companies brought IPOs in 2020 and around 25,000 crores were raised from the IPOs. Most of these IPOs were oversubscribed, Mrs. Bectors was the highest subscribed IPO, 198 times, and gave good listing gains. Many companies are coming with IPOs in 2021. With LIC IPO being the most awaited one. Which IPOs are open in 2021, Performance of IPO in 2021, How to Increase IPO allotment chances, Things to consider before investing in IPO, Lessons from Recent IPO.

IPOs in Mar 2021

IPOs in Mar 2021

Performance of IPO in 2021

Issuer Company Issue Open Issue Close Grey Market

Premium

Issue Size
(Crore Rs.)
Issue Price
(Rs.)
Listing Day
Gain/Loss
Indian Railway Finance Corporation Limited IPO
Jan 18 Jan 20 4,633.38 26.00 -4.42%
Indigo Paints Limited IPO
Jan 20 Jan 22 1,176.00 1,490.00 109.31%
Home First Finance Company India Ltd. IPO
Jan 21 Jan 25 1,153.72 518.00 1.81%
Stove Kraft Limited IPO
Jan 25 Jan 28 412.63 385.00 15.83%
Nureca Limited IPO
Feb 15 Feb 17 150-160  100.00
RailTel Corporation of India Limited IPO
Feb 16 Feb 18 ₹25-30 819.24
Heranba Industries Limited
Feb 23   Feb 25 ₹626 to ₹627 Per Share   

How to Increase IPO allotment chances?

I’ve not been allotted any shares in the last few IPO. What am I doing wrong and what can I do to increase IPO allotment chances?
Single or Multiple lots: SEBI’s current allotment process treats all retail applications (less than Rs 200,000) equally. So in the case of oversubscription applying for many lots has no advantage.
Different Demat accounts: Only one application per PAN ownership is considered. Making multiple applications from different Demat accounts with the same PAN ownership has no advantage. So apply from Demat accounts linked to different PAN numbers.  So you open Demat accounts in the name of your family members and apply in IPOs. Opening new Demat accounts is easy these days.
Price bids v/s cut-off bids: One should place their bids at either cut-off or maximum price to increase IPO allotment chances. By selecting a specific price, the investor tells the that he is interested in buying shares at that price while cut-off simply conveys that the investor is flexible to buy at any price within the price band. For example, the price band of the IRCTC IPO was Rs 315-320 per share. As IRCTC was oversubscribed, bids below Rs 320 per share were not considered in the allotment.
Buy parent or holding company shares: If the parent of the IPO company is already listed and there is a reservation for shareholders in the parent company. For example IPO of Ujjivan Bank, the retail category was subscribed 48 times while the shareholder category was subscribed only 4 times. So chances of allotment are much higher in the shareholder category. And one can place bids in both categories!

Lessons from Recent IPO

Burger King IPO date was open from 02 December to 04 December. The price band was fixed at Rs.59-60

Burger King IPO was subscribed 156.65x times, QIB 86.64x, HNI 354.11x and RII 68.15x times overall.

Burger King IPO Listed at ₹112.50 on NSE and at ₹115.35 on BSE. The IPO listed at a 92% premium against its IPO Price.

on 17 Dec 2020 Burger King hit a high of Rs 213.80 and fell to 174.14

On 28 Jan 2021 Burger King fell to 128.44

Many of those who could not get an allotment in IPO opted for buying later and got trapped at higher level. 
The FOMO (fear of missing out) factor in Burger King IPO was instrumental in driving investors to the initial public offering (IPO) of Mrs Bectors Food Specialities, leading to an oversubscription of 198  times. The quota for retail investors was oversubscribed 29.43 times,

The question is, will the trend of robust listing gains continue?

Many enter the stock after listing and wonder if the stock has turned too expensive.

Before Investing in IPO

  • Are you planning to invest in the IPO to make a quick profit on a listing day or do you want to hold the shares for a longer period?
  • If you are in for listing gain, don’t get greedy. At least book partial profits.
  • If you are buying for the long term you should know about the company’s background, its financial performance, and future prospect.
  • And also
  • Is IPO is made through an offer for sale or a fresh issue
  • Who is doing the selling?
  • What are they going to use the money for? Will the money be used for expansion of the company or old investors are selling.

Difference between IPO, FPO, and OFS

Mrs Bectors IPO was in the price band Rs 286-288 and comprised an offer for sale (OFS) of Rs 500 crore and a fresh issue of Rs 40.5 crore

In an IPO, an unlisted company issues fresh shares and goes public. IPO is a mechanism for an unlisted company to raise funds from the primary market and also list the stock in the stock exchange.

In a follow-on public offer (FPO), an already listed company issues fresh shares to new investors or existing shareholders. Companies take the FPO route after they have been through the IPO process. 

In OFS(Offer for Sale) is when promoter reduces stake in a listed company. No new shares are created. An OFS only results in a transfer of ownership from one shareholder to another and does not increase the share capital of the company. This facility is available only to the top 200 companies in the share market. The ranking is based on market capitalisation. 

In an OFS, the company sets a floor price and a buyer has to bid at or more than the bid price.  There is no minimum limit to participate in an OFS. A buyer can bid for even a single share in the OFS process. Once the bids are placed, shares are allocated to the bidders. The only requriement for a company to bring out OFS is for the compant to inform the stock exchanges up to 2 days in advance.

Some companies combine their IPO with OFS to give partial exit to promoters and to private equity (PE) investors. The issue of Narayana Hrudayalaya launched is an of an IPO and an OFS combined.

In IPOs and FPOs, the process to raise funds is lengthy as it involves issuing a prospectus and then a wait for receiving applications and allotting shares to investors. An OFS can be completed in one trading session.

What is Grey Market Premium

The  Grey market premium or GMP indicates at what price the IPO might list. The grey market is unofficial and investors track at the grey market price of an IPO to get the fixed gain of the stock. The grey market is tracked before the IPO listing and during the days from IPO start date to the allotment date. 

Let us see an example. If the company comes up with an IPO of ₹100 and the grey market premium is around ₹20 then one can expect that the IPO might list around ₹120 on its listing day.

But there is no reliability. 

Upcoming IPO in 2021

IPO Tentative Issue Size (in Rs Crores)* Tentative Date*
LIC 70,000 2021-22
Nykaa 2021-22
Kalyan Jewellers 1,750 January to March, 2021
Bajaj Energy 5,450 2021
Studds Accessories 450 February 2021
Suryoday Small Finance Bank 400 2021
Laxmi Organic Industries 800
Craftsman Automation 150 +
Barbecue Nation 1,000-1,200 2021
Apeejay Surrendra Park Hotels 1,000 2021
Shyam Steel 500 2021
Annai Infra Developers 200-250 2021

History of IPO

 IPO list year-wise 

Year No. of IPOs Amount Raised

(In Rs Cr)

Issue Succeeded Issue Failed
2007 108 33,946.22 104 4
2008 39 18,339.92 36 3
2009 22 19,306.58 21 1
2010 66 36,362.18 64 2
2011 40 5,977.47 37 3
2012 13 6,834.17 11 2
2013 5 1,283.95 3 2
2014 7 1,200.94 5 2
2015 21 13,513.17 21 0
2016 27 26,500.82 26 1
2017 38 75,278.57 38 0
2018 25 31,731.28 24 1
2019 16 12,687.32 16 0
2020 16 26,628.06 15 1
2021 * 6 7,375.72 4 0

Related Articles:

IPO: Process,Types of Investors, Allotment, Lucky Draw for Retails investors

All About Investing in India: PPF ,Fixed Deposits, Mutual Funds, NPS, Stocks

Do you invest in IPO? What do you look for before investing in IPO? Which is the most profitable IPO you had? Which IPO are you looking out for in 2021?

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