what is ipo ? II what is ipo in stock market ?

If you are interested in investing in the stock market, then you must have heard the name of IPO, but even if you have never heard this name, it does not matter because today we are going to tell you a lot about IPO.
Or you can say that after reading this article, it will be known that what is IPO, how you can take benefit from it, what are the disadvantages of it and how many types are there, so keep this article till the last. Do read it completely.

What is IPO?

Know about IPO, from the beginning the full form of IPO is Initial Public Offering and through this process a private company is transformed into a public company.
Through IPO, the company goes public, gets itself listed on the exchanges and sells shares, through IPO, companies get an opportunity to grow by raising their capital, in which money is raised by issuing shares to the public what is ipo ? II what is ipo in stock market ? .

What is IPO?
In the stroke market, it is called First Public Invitation, hence the name IPO!
SEBI regulates this process in India, through IPO, investors are able to get a part of the ownership of that company because they have some shares of that company.
With this process, the small investor gets this opportunity to earn smart returns on his investment i.e. IPO can also give you profit, then it is beneficial to know more and more about it.
Investing in IPO can be a good decision but investing in every IPO can be risky as benefits and risk go along with it.
Therefore, after understanding the basics and taking the details of the upcoming IPO, one should make an investment intention.
IPO is the first time a company issues its shares to the public and it happens when a private company decides to become a public company.
While being a private company, the company has very few shareholders, in which
Early Investors
There are friends!
And in professional investors there are venture capital list or angel investors but when the company reaches the stage of its growth process where it is sure that it is ready for SEBI regulations also.
And the public has also agreed to take the responsibilities of the shareholders, then that company starts showing its interest in being a public company and also advertises it.
During the IPO, the company opens the sale of your shares to the public and as an investor, you can directly buy the shares of the company and become a shareholder.
But you should also know that even though you can buy shares first as an investor, you will have to wait a while to sell them because after the IPO is listed on the stock exchanges, you sell the shares and not before that.

Why Does a Company Go Public ?

But why a company becomes public, let us know that the company has to raise capital for its growth and operation, more funds are needed.
Money is needed to increase the company’s operations and money is needed to develop new products and to pay off the company’s debt.
And by becoming a public company, it becomes very easy to earn so much money, through IPO, the company can publicize its products and services among new customers in the market.
Through IPO, the company’s exposure, prestige and public image increase, which improves the sales and profit of the company what is ipo ? II what is ipo in stock market ?.
The transparency of the company increases due to the quarterly reporting, which proves to be more favorable in comparison to the private company.

What is IPO?

IPO is a very big step for a company because through this the company can raise a lot of money i.e. IPO offers great opportunity to a company to grow and expand.
So this is the reason for a private company to become public i.e. IPL is a fundraising method for large companies in which the company sells its shares to the public for the first time.
But whether IPO only brings profit to the company and investors, let’s find out.
When you subscribe the shares during IPO then you will become one of the initial shareholder of that company and as the company grows the share price will also increase which will make you profit
But you should also know that as an investor, you can also make a lot of profit from IPO and also a lot of loss i.e. whatever will happen, that is why the roof will be torn.
The investor should invest only keeping in mind the risk factors about that company and the individual financial circle so that even if there is no huge profit but the loss also remains negligible.

Some Disadvantage for IPO

And some of the disadvantages of IPO for the company are that IPO is quite expensive and it is quite tough to maintain a public company in comparison to a private company.
For IPO, the company has to close its financial accounting, tax and business related important information which can be beneficial for the competitor.
If the IPO market does not accept the price, then there will be no funding raise, this risk also remains.
Two Common Types of IPO
Let us know two common types of IPO
Fixed Price Offering or Issue
Book Building Offering or Issue

Fixed Price Issue

In this, the company, along with its underwriters, makes the price e-value of the offering, in which the company’s
Thereafter the price of the offer is fixed and in this the fixed price is mostly less than the market value, hence the investors are always interested in the fixed price issue.
let you know
Financial Institutions
Merchant Banker or Broker
Maybe they assist the company in underwriting their strokes.

Book Building Issue

Now let’s talk about book building issue which is comparatively a new concept in India, there is no fixed price but price bed or price range, lowest price is called floor price and highest price is called cape price.
In this, the investor can put a beat for the share and after evaluating the beats, the price of the stroke is fixed.
To understand this, let us take an example like a company launched its IPO whose price range is from 250 to 300.

Why Does a Company Go Public ?
In this, the floor price will be ₹ 275 and the cap price will be 300, now if the allotment price is Rs 275, then the investors who have beat 275 or more will receive the allotment.
Now if one understands the major difference between these two offerings, then the price of the share gets fixed on the first day of listing in the Fixed Price Issue.
An order gets printed on the document whereas in book building jesus initially only the price beat is fixed and the exect price is not fixed.
In fixed price issue, the demand is known only on issue closing whereas in book building issue the share demand is detected after every day what is ipo ? II what is ipo in stock market ?.
In Fixed Price Issue, you have to pay 100% of the share price at the time of bidding whereas in Book Building Issue, payment can be completed even after allocation.

What Are The Steps A Company has to Follow for an IPO ?

1 To prepare all the details of the deal, amount and security details by hiring an underwriter or investment bank.
2 Registering for IPO.
3 Getting the verification done from SEBI.
4 Getting the verification done in the Stock Exchange.
5 Advising IPO.
6 Initiating the price of IPO through Fixed Price Issue or Book Building Issue.
Allotting 7 Shares.
So the company follows these 7 steps, only then it is able to allot the shares, it is really a long process.
Talking about the investor after the company, when a company launches an IPO, investors can invest in many categories, that is, there are many types of investors.

Many Types of Investor

1 Retail Individual Investor (RII)
2 Non – Institutional Investor (NII)
3 Qualified Institutional Bidder (QIB)
4 Anchor Investor
Retail Individual Investor (RII)
This is the most common category in which
Resident Indian Individuals
Non Resident Indians NRIs
Hindu Undivided Families
The maximum investment amount in this category is Rs 2 lakh, for this category, the minimum 35% of the IPO is reserved, investors of this category can bid on the cut off price.
Let us tell you that the cut off price is the price at which the shares are issued to the investors.
In this category, the beat can be withdrawn till the day of allotment and allotment is the process in which the shares are allotted to the shareholders.
Non Institutional Investor (NII)
If an investor qualifies to bid in the category RII but wants to invest more than two lakhs, he will be placed in the NII category.
in this category
Resident Indian Individuals
Hindu Undivided Families
Corporate Bodies
Science Institutions
Societies come
Investors of this category can invest more than 2 lakhs, a minimum 15% of the IPO is reserved for this category.
Investors in this category cannot place the bit at the cut off price and the bet in this category can be withdrawn till the allotment day.
Qualified Institutional Bidder (QIB)
in this category
Mutual Funds
Public Financial Institutions
Foreign Portfolio Investors
Commercial Banks
50% Offer Size of IPO is reserved for this category. Investors of this category cannot beat the cut off price and while staying in this category, the betas cannot be withdrawn after the IPO is closed.
Anchor Investor
These are QIBs who give applications for more than Rs 10 crores in Book Building Issues.
in this category
Resident Indian Individuals
Hindu Undivided Families
Corporate Bodies
Science Institutions
Societies come
This category is allotted up to 60% of the QIB, even the candidates of this category cannot beat the cut off price.

Many Types of Investor
How are the roles of the company and the investor in an IPO?
What are the procedures in IPO, you have taken all such information, but it is also important for you to know that you cannot apply for IPO through multiple applications with the same name.
If you do this, then all the applications made from the same name will be rejected, if you want to apply through multiple applications, then you can apply in the name of your family member what is ipo ? II what is ipo in stock market ?.
But it is necessary for them to have Demit Account and PAN Card, so friends, in this way now you must have come to know what is an IPO and how can you take benefits in it while remaining aware.

Nevertheless, once again remind you that before investing in IPO, definitely check about the background of the company and its promoter.

More Read…

The company has to know about the profile, how many years that company has been in business, how has its growth been in so many years and keeping all these things in mind, invest only.
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