What is IPO? | How to Invest in IPO & Earn Money? | #IPO Investment Explained for Beginners

You must have heard a lot of people saying that we invested

in an IPO of a company and our money doubled in a few days.

So does investing in an IPO really double the money in a

few days? How does it happen? How can you invest in an IPO?

Or some people also suffer losses by investing in an IPO.

You are going to understand the whole game of this IPO

today.

So if you do not know, there are a lot of new investors who

are very curious to know about the IPO.

What is it and how can we invest? You will get the answers

to all your questions in this video.

So we will start.

First of all, what is IPO? IPO means Initial Public

Offering.

Now what is the meaning of Initial Public Offering? If it

is an ABC company and we will talk about the reason why it

is taking money.

It wants to expand.

Now let's assume that this company has factories and there

are 10 factories that are running very well.

But now the company wants us to reach up to 100 factories.

We not only have to supply our goods all over the world in

India, we have to reach up to 100 factories.

Now think that it is going to cost crores of rupees in one

factory.

So now to open so many factories, to reach up to 100, you

will need thousands of crores of rupees.

Now how will you get those thousands of crores of rupees?

First, let's assume that this company has taken money from

a private company or a venture capitalist firm.

But now there is not enough money to reach here.

So for that expansion, the company will go public.

Now understand this very carefully. In today's date, no

private limited company can take money from the public. It

is illegal.

It is not allowed. If any company is private limited, it

cannot take money from the public.

But here if the company is going public following certain

guidelines, we say that the company is going public.

So it is becoming public limited from private limited.

Only then it can take money from the public.

Now tell me one thing, why will you or we give money to a

company? What is the company giving us? Good question.

The company gives us shares.

The company will give us shares. It will give its shares.

In return, we will give it money.

So this is one way that we are asking for money to expand.

The company is asking for money to expand.

Can there be any other reason? The answer is yes.

The second reason of the company may be that a lot of debt

has been imposed on the company.

Now the debt is not coming down.

Now so much debt has been imposed.

Its loans are also going.

Its interest has to be paid.

The company is under pressure.

It is not able to do business.

So it needs money.

Now if it needs money to avoid pressure, what will it do?

It will take money from the public.

But for that too, it will have to make a list.

Where does it have to make a list? You know about the stock

exchange.

What are the stock exchanges we have in India?

Bombay Stock Exchange and National Stock Exchange.

It is called BSE and NSE.

So now the company can be listed on either one or both.

Stock exchanges and when it is listed in the exchange it

can raise money from the public by following these

guidelines.

Now the reason for repaying the loan is understood.

Can there be any other reason? The answer is yes.

The people who invested in the starting, suppose they want

to take exit.

Angel Investor gave 5 crores to this company in the

starting.

Venture Capitalist Firm gave it 50 crores.

But when the company will give public money, it can come in

thousands of crores.

So when so much money will come, they will get a lot of

profit.

And that is why in the starting, Angel Investors and Venture

Capitalist Firm invest in the company because they know

that the day the IPO will come, our investment will be

multiplied and we will get it.

Now you people are investing today.

Can there be multiple profits in the future? Now we will

understand this from here.

Which people invest money in the IPO first? Now if an IPO

launches, then three types of people invest money in it.

First are Qualified Institutional Buyers.

Now who is this? Qualified Institutional

Buyers. Institutional means those who have a lot of money.

Do you know about Mutual Funds?

You must know.

So Mutual Funds companies got a privilege first that they

can invest in a company's IPO and for this they will also

do research that how much profit can be made after

investing in the IPO.

Apart from this, you take insurance.

Now the premium of that insurance that you pay goes to the

company.

What does the company do with that money?

Companies have this opportunity that they can invest in

such IPOs.

Apart from this, many big corporates can also invest.

There is a provision for this.

What is the provision?

So much percent will be reserved for these people.

This first category, Qualified Institutional

Buyers, have up to 50% reservation for them.

So the quota system runs here too.

So the first thing you think is that I will launch an IPO.

Suppose there are 100 shares of a company.

So 100 out of 100 will be bought by the public.

The answer is no.

If there are 100 shares, then 50 will be reserved for QIB.

For example, there can be a lot of shares.

So here Qualified Institutional Buyers will be the first to

play.

So first of all, they will be invited to the party.

After that, who will be called? Non-institutional investors

are called NII.

Now who are they? You must have heard about high net worth

individuals. HNI people, who have a lot of money, can

invest. So there is a reservation for them too.

They have a quota of 15%.

So 15% reservation will be for them.

Now, after high net worth individuals, common people come,

whom we call Retail Investors.

Now what does retail mean?

Retail means those who will invest less than 2 lakhs.

Those who invest less than 2 lakhs, we call them Retail

Investors.

So how much money do you want to invest? If it is less than

2 lakhs, then you will be in the category of retail.

If it is more than 2 lakhs, then you will be in this

category.

So now you come under retail, then what is the reservation

for them, which is left? 35%.

So if a company is taking out 100% shares, then 35% is

reserved for you for Retail Investors.

Now the thing comes here, what can happen after this? Now

assume that 35% is reserved here, but a lot of people have

come.

Let's assume that there were 35 people here and everyone

was asking for a share.

Now, let's say 70 people have come here.

It has doubled.

More people have come.

So now it is said that the IPO has been over-subscribed.

Here it has become 2x.

Similarly, the same thing can happen here.

There is a reservation for them here too, but suppose three

times more people have come here and they said that we want

more shares and there are a lot of people, so there is a

lot of demand.

So if an IPO is over-subscribed 3x, 5x, 10x, 20x, then it

is said that the IPO is good.

Because when it will be listed, there is so much demand,

then what will happen? If there is so much demand, the

first thing is that the chances of people meeting will be

less.

If, let's say, 2x more people have come, then not everyone

can meet.

Then in a way, a computerized lottery will run.

People will be allotted shares on the basis of lottery.

But can one share be bought in IPO? The answer is no.

You understand this too.

I want to explain everything to you.

Suppose there is an IPO list of a company and that IPO list

is happening for ₹ 100.

It is a share of ₹ 100.

This is the share price.

It is called issue price.

So here the issue is happening for ₹ 100.

Now can you buy a share of ₹ 100?

The answer is no.

There you will be told that you have to buy in a lot.

You will have to buy a lot.

Now you will ask that how much is the lot? They will tell

you at that time that there is a lot of 140 shares.

This means that if you want to buy, then you will have to

invest ₹ 14000 if you want to participate in the IPO.

The question arises that why should we invest ₹ 14000? If

we have invested ₹ 14000 in the IPO, what if our money is

lost?

Good question.

Now here I will tell you something very interesting.

Most of the people, especially retailers, invest for two

reasons.

One is speculation.

We will talk about it later.

And the other is investment.

Now what is speculation? If you have invested in the IPO.

Let's assume that the IPO of a company is happening on 16th.

The IPO is happening on 16th.

Example, and you have invested ₹ 14000 on 16th.

You will get to know whether you will get the share or not

in 2-5 days.

Let's take a time period of 10 days.

By 26th, that IPO will be listed.

Now when that share will be listed, the company was asking

for the issue price of ₹ 100 in the starting.

But when it will be listed, where? On BSE or NSE, then it

is possible that it will be listed for ₹ 200.

So if you bought a lot of ₹ 14000, then in a few days, in

10 days, in 15 days, how much will it be worth?

It will be worth ₹ 28000, if it is listed for ₹ 200. And

this generally happens.

Good companies that bring IPO, when they issue the price,

people get a lot more money than that, when they invest in

it, when it is listed.

So the speculators book the profit here quickly.

Assume that there is 3 times the money here or 5 times the

money.

It happens.

If there is 3 times the money here, then they book the

profit immediately and sell it.

But what do investors say?

We bought a share of a good company at a very low price.

Now we will hold it.

So now the question arises, is there a profit in holding or

is there a profit in speculation?

I will definitely tell you in this video and we will make

more videos on it in detail.

Because it is a little difficult to cover everything in one

video.

So I will just show you where your profit is more. load

fast.

Now we come to the history of IPO.

So here you can see that there are many companies whose IPO

has been listed.

Now you see that there is Jubilant Food here.

Have you heard the name Jubilant Food? You must have heard

the name of Domino's.

So Domino's parent company is Jubilant Food.

When its IPO came, here we can see that when the IPO came,

the issue price was Rs 145, but when the IPO was listed,

when the listing was closed, it was Rs 114. So the

percentage of loss that people had in the starting, see the

loss, minus 21.

But after that, if you look at the current gains in today's

date, then the issue share of 145 was above Rs 3000 today,

above Rs 3100 and more than 2000% people benefited from

investing in a good company.

So now the question of people is that will the money double

directly?

It is not necessary that good companies will double their

money suddenly because people book profit.

Speculators book profit and because of profit booking, it

is not necessary that there is a sudden profit.

But now, does there is a sudden profit? I will show you the

listing gains here.

So now assume that there is a company called Birla Pacific,

its issue price was Rs 10, but when the listing was closed,

it became Rs 25.

So the money has doubled here.

You can see that a return of 153% has come.

Similarly, there are many companies like IRCTC, Burger King.

The issue price of Burger King is Rs 60, but when the list

was closed, it became Rs 138.40.

Here people got a return of 130% in a few days. So does

money double in IPO? The answer is yes.

There are many such companies.

You can take IRCTC, the issue price was Rs 320, but when

the list was closed, it became Rs 728.

So the money has doubled.

Here you can see that there is a return of 127%, but if

people have sold it there, what do speculators do? It has

doubled, sell it.

But if you wait a little, then if you see till today, it is

running for Rs 2200.

This share price is running for

Rs 2200, so there is a difference between investors and

speculators.

But what do you want to do? Totally up to you.

You can speculate and immediately take out the money.

And if you want to be an investor, then you can do that too.

Because the price you get initially, you get it at the

price at which its actual value is.

So when we talk about buying less than the intrinsic value,

then you can do value investing through IPOs.

Now it comes to how you can invest in

IPOs. I will just show you.

So I turn on the screen recording too.

Now here I go to Angel

Broking. Now as soon as I went to Angel Broking, what you

will do, here you can see, we went to the menu and click on

Invest Opportunities.

When you click on Invest Opportunities, you can see here

that IPOs and FPOs have come.

If you click on this, then whatever next IPO is going to

come, as you can see here, Zomato's IPO is coming and it is

opening on 14th.

So if it is opening on 14th, then you can apply for it.

Now you need to have a Demat account if you want to invest

in, as I said, in IPOs.

So I will give the link of Angel

Broking in the description and comment box of this video.

So you click on the link and open your account and as soon

as your account opens, you just see, what next IPO is

coming, you study about it.

After studying about IPO, if you think that company is

good, then you can definitely invest in it.

And finally, I will show you one thing that next, as you

can see, Zomato's IPO is coming.

So one more thing you have to see is the gray market

premium.

Now what is this gray market? You are understanding gray,

gray means dark area.

Dark area means which is not legal.

So here you have to see that if its premium is running more

in the gray market.

Here you can see that the premium in the gray market,

Zomato's IPO is 26% more.

What does this mean? That its demand is more from now.

When it will be listed, then people can have more profit.

People are ready to give more money to it in the gray

market.

Why? Because everyone does not get shares in the IPO. Why

not? We are going to talk in the next video.

How can you get it? We are going to talk about it. For now,

open your Demat account.

There is a link in the description comment box.

And if you like this video, to give your love, quickly like

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understanding about IPO. You can ask some questions in the

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