InvestorsAreIdiots.com always recommends an IPO with good fundamentals, fairly priced and in-line with our investment philosophy. One of our best pick is Quess Corp, we recommended our subscribers to apply for the IPO and the company has give 185% returns. Individual investors can gain from our IPO recommendations even if held for a long time.
We have not recommended many well performing IPO’s due to various reasons of valuations or not subscribing to our core investment philosophy. Click here for our Swachh Investment Philosophy.
The next two years is likely to see Indian equity markets cross many peaks as both the global economy and Indian economy are seeing signs of coming out of a long slump post 2008 financial crisis. Indian equity markets will start playing for 2019 re-election of the Modi Government at the Centre.
The expected implementation of the Goods and Services Tax (GST) in the year 2017 would prove to be a boon in streamlining the indirect taxation system for various sectors of the economy. The policy changes brought about by the BJP led NDA Government at the Centre would positively impact different sectors of the economy in the next few years.
Indian primary markets have witnessed surge in Initial Public Offerings (IPO’s). Since Jan 2016, 38 companies have come up with Initial Public Offering (IPO’s) and have successfully listed on domestic bourses with record breaking subscription levels. Through primary market route these companies have raised Rs. 350.20 billion.
Investors have welcomed the IPO’s with huge oversubscription, market has rewarded them as only 8 out of 38 IPO’s have given negative returns till date since their listing on bourses.Following table showing outperformance/underperformance of IPO’s compared with BSE-Sensex.
BSE introduced the new index series – S&P BSE IPO index to track the current primary market conditions in the Indian capital market. BSE on August 24, 2009 announced the launch of S&P BSE IPO index to track the value of companies for two years after listing subsequent to successful completion of their IPO.
Key factors driving IPO market:
- With sustained economic growth and government policy on ease of doing business, many companies manage to scale up to a level so that they gain credibility in the market. This helps the companies approach primary markets to access investors through IPO’s.
- Sometimes cost of raising funds through equity would be cheaper when compared with raising funds through the debt market, it also helps the company to maintain low WACC (weighted average cost of capital)
- Private equity, venture capitalists are preferring IPO route for the exit of their investments in companies through OFS (offer for sale).
- Institutional and retail participation in the primary market have improved, many of the IPO’s are getting more oversubscribed than ever before.
Investors repeatedly make mistakes of buying the wrong IPO’s/stocks at the wrong time without studying their fundamentals. There are always IPO’s which are over-priced or fundamentally bad, such IPO’s shall drain away retail investors money over a period of time. They may list if they are fancied or if markets is on an upsurge.