IPO or Initial Public Offering is process where a private company is offering shares to the public. The promoters or the owner of the company sells their stake to the public by reducing their stake. For example, the promoters reduces from 100% or 90% to 75%.
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Now IPO is a great way to buy the shares of the company at the low price or even if it is best to get some returns in the process. All the good companies when they go public, go via the IPO route. For example, companies like Zomato, HAL, HDFC Bank and other companies also has gone via the IPO route to list their shares in the stock market.
Now I think everyone should invest in via the IPO route. I am not saying that we should invest in all the IPOs. But for some IPOs, it's better to invest via the IPO. This is because you get good stocks at low price and along with that you can invest in your favorite company at the earliest. Getting the shares via IPO is not guaranteed, but we should apply it.
Applying for IPO is easy as well as you don't have to spend anything for applying. For example, if you are applying for the retail quota, you can get shares upto Rs 15K. And when you apply, a manadate of that money gets created on your account. When you get the IPO, the mandate money gets debited from your account and the shares gets credited in your demat account.
In this way your money doesn't debited in your account until and unless you get the IPO. Not all the stocks you get from IPO is worth keeping in your account for long term. For some stocks, you can sell for profit at the listing dat itself. I am applying in the IPO for the last 4 years. I am getting the IPO and some of the great stocks in my portfolio is from the IPO itself.
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