How to make quick money on an IPO | How to Find IPO with Potential listing gain | How to invest in IPOs : Strategy

 

Strategy: How to invest in IPOs

IPOs in India have always attracted a lot of investors, for example, the recent listing of Burgerking was at a listing gain of 130percentit means those who invested rupees 15000 in burger king, saw their investment value jumped to rupees 34,500 giving rupees 19500 on the first day As profit that's more than double. The return similarly happiest mind gained 111percent on the first day. so those who got the shares of the IPO were sitting on hundred and eleven percent profit on the first day likewise cam comb specialty chemical was listed at a premium of 115 percent over its issue price. rosary biotech started the first trading day with a hooping 57.65 percent premium over its IPO price. route mobile was listed at 104.86 premium over its issue price naturally this is easy money. but it is important to understand that not every ipo would be listed at such high premiums. there can be a case where the ipo gets listed at lower than the offered price giving a negative return. naturally, you would like to invest in those companies where you can get high listing gain and you would want to avoid companies that might not give a good listing gain.

Now the biggest question is “how to identify if the company can generate good listing gains on the first day of listing?” In this article, I am going to tell you the secret to make quick easy money in an IPO.

All right let's come back to this topic, where I will show you how to shortlist a potential IPO for a quick gain. let's get started. there are two options to decide if the company can give good listing gain or not. the first option is to do the detailed analysis of the company where you understand the business of the company, its competitive, strength, key risk, future growth, prospect of the industry and the company and finally you check the financials, including the historical growth, profitability, and valuations but that requires a lot of time, energy, and knowledge.

Now, what if i tell you that you can decide within five minutes if the company would give a good listing gain or not. guys, I am serious! you can actually identify in just five minutes whether the company would give good listing gains or not. you just need to do three steps so let's look at each step.

Check the gray market premium of the company, companies with a good premium in the gray market would give good listing gains. for example the gray market premium of burger king was 85which means burger king price was trading at 85 percent profit before the IPO listing and what was the result on listing day it was launched at the premium of130 percent.

 Now, what is gray market? Premium a gray market is a place where company share are bid and offered by traders unofficially. this takes place before the shares are even listed or issued by the company on an initial public offering(IPO). so it is an unofficial market. please note that it is not illegal it is completely legal since this is an unofficial market, there are no rules and regulation market regulators like Sebi are not involved in these transaction. so the first step would be to check the grey market premium, you can simply google the name of the company and use the keyword gray market premium and you will get the details for example. if you simply search burger king gray market premium then you will get various links, so you can click on the various links and see the gray market premium. for example if we click on this you can just scroll down and you can see that it says that as expected the price band is fixed at 59to 60. so we can expect a good grade market premium for the IPO. the gray market started with a good note around 28 to 30 and going up and settled around 40 to 45level.

Likewise, there is indigo paint ipo that is in progress so if you just search indigo paint gray market premium you can see various links, so you can click on that link you can see it says indigo paint share for commanding a gray market premium of rupees 895 to 900 or 60 percent atrupees2390 a piece over the issue price.

 check the brokerage houses report now there are many brokerage houses that suggest if you should subscribe to the ipo or not, you just need to search the company name and use keywords like brokerage house report or you can be even specific. for example, some of the common brokerage house include motilal oswal, icici security, Anand Rati, angel brooking iifl, etc. you can type the company name followed with the brokerage house name these are the companies that do the in-depth analysis and provide recommendation if the majority of brokerage house suggests a buy then there are high chances for the listing gain. if you simply search burger king ipo broker report then you will get various links so you can scroll down and see for example here in this particular economic times article, if you click on this you will see various brokerage house recommendation. for example, has said subscribe I say security said subscribe. likewise, you've got various brokerage house recommendation like choice broking prabhutas leeladharjioji financial serviceskr choxi etc.

now this is the final step you need to do, where you can check the subscription status during the three days of IPO application. so normally if the company is expected to do well, there would be a good subscription on the first day, you will get three days to apply for the ipo so you can invest on the second or the third day on the basis of ips subscription status. the more the subscription the better would be the listing gain chances.

again you can simply google the company name followed by the keyword ips subscription status and you will get the details. so if you simply google, let's say happiest mind ib subscriptionstatus then you can see various links now, if you scroll down you can read happiest mind IPO subscribed over 150times. likewise, you can search let's say indigo paints IPO subscription and if you scroll down you can see that it says indigo paint ipo subscribe over 50 times so far on final day. if we conclude for the IPO to give potential listing gain, it should have a high grade market premium subscribe rating from multiple brokerage houses and finally high subscription during the three days of IPO application.

Guys, there are many potential companies lined up for the IPO in 2021. some of the potential names include Zomanto Delivery, Policy bazaar, Flipkart, Freshworks, Nika etc. so next time you apply for the ipo make sure that you apply these three steps. that we discussed in the article, but there is only one problem if an IPO has a high gray market premium and multiple subscription call from various brokerage houses, there will be multi-fold subscription for the ipo during the three days of application window and in that case, it would be a lottery system so higher the subscription lower would be the probability of you getting the allotment.

Also Read: Should you apply for MTAR IPO- MTAR IPO Detailed Analysis

But there is no harm in trying the luck isn't it. By the way if any one of you know the secret formula to get the allotment lottery in case of multiple times subscription then please share it in the comment box and did you make a good profit in previous IPO allotment, do let me know in the comment box.

Finally please note that this formula is only to identify the ipos with potential listing gain. it is not for the long term investment for long term investment, you need to do the fundamental analysis and this article is only for educational purpose. Please consult your financial advisor before investing your money and also let me know what topic do you want me to cover in this blog next. Thanks for be here I hope you get something helpful. see you next time till then take care. 

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