Basics of earning money in IPO - Initial Public Offering

If you are a beginner in stock market , you would have seen that there are so many companies to invest.
The amount of recommendation of companies floating around by brokerage agencies is overwhelming. After investing in few and winning and losing in few of the recommendations , you may feel is it worth it to stay investing in stock markets

If you are a fundamental investor or technical trader you will find your way after some experience. For people who are getting their feet in , IPO’s provide the best and easiest way to enter into the stock market.

What do you need to invest in IPO’s
All you need to invest in an IPO is a sum of around 15,000 rupees, a bank account which gives to ASBA to apply to your demat account in zerodha( SBI, Axis, Bank of Baroda etc ). Whenever an IPO comes into the market , there will be a decent reviews by brokerage firms and analysis by finance experts. You will know beforehand whether the company is reasonably priced or not.

If the company IPO is good, the issue will be oversubscribed and you will your application will be selected based on draw / lottery system.
One more thing to note is the IPO applications can be done online using the ASBA facility which means the 15000 rs will stay in
your account unless you are allotted in the lottery.

Historic data:
In 2016 there were 26 IPO’s
In 2017 there are already 30 IPO’s listed as i write this
Performance tracker of IPO’s -

Now if we look at the recent history of IPO’s in 2017 , 21/30 IPO’s have positive listing , the stand out has been DMART started with IPO price at ~300 and it is trading now at ~1200 odd!!! a return of 4X. The surprising thing is it listed at 600 which is double the IPO price and has further doubled from there within this year.

As i mentioned earlier , the rest 9 IPO’s which didn’t make money were mostly bad fundamentally and a 5 Min review of there PAT and revenue would help you avoid those. You can even view reviews of these IPO’ on Chittorgarh or Chanakya - I am not aware if Zerodha has a blog for IPO’s :slight_smile:

Please let me know if you guys have any doubts

Happy Investing,

Disclaimer: I am not a SEBI registered adviser. Please contact your financial adviser for before making any investment - Money Matters :slight_smile:


Let me give you a contrary view on IPO

IPO is never from investor favor reason :slight_smile:
a) Business times the IPO
b) Business also decides how to manipulate the price
c) Business always plays around with Ignorant folks

Ex : In recent past each IPO is coming up with prices which are 20 or 30 times the book value . Just based on herd mentality many are following . Apart from that not much steam in IPO

Please read a link below from Manish pabirai (Dhandhao Investor)


Thanks for the contrary view Raghavendra, - Yes , all companies want to list when markets are at all time highs - so they get premium valuations , depending on the demand we currently will get listing gains. If the company has sound fundamentals and fair valuations then it will multiply.

1 Like

If your looking for fair valuation and sound fundamentals why look for in IPO .Nowadays any IPO which comes Price to Book Value is 5X or 10X . If you look at the P/E Ratio they are trading at 40X … . Not able to digest it . Find it very difficult to justify the valuation .Yeah like as you said just apply for 1 lot . Exit on listing . As long as market euphoria exist u will not make loss . But I still believe we have better stocks like (HDFC Bank , Asian Paint , Axis Bank …etc) which folks can check on . All said and done . I am not against IPO .But feel sometimes crowd just following recommendation without valuation will bite them hard . In stock market learning can prove expensive . My only suggestion to folks apart from how many times its oversubscribed please start reading the financials .
Invest in Business which is within your circle of competence with fair valuation

PS : Again i am not against IPO . If we keep our eyes wide open we have better opportunity for long term wealth creation

Regarding ipo if my ipo application is rejected can I apply again? Is there any limit?

If your application was unsuccessful for some reason, you withdraw the previous application can make another application.

Only one application is allowed per Demat and PAN.