How investors created wealth by investing in IPO’s in 2013?
How investors created wealth by investing in IPO’s in 2013?
One of the best investment plans which I suggested on new year day is to invest in new IPO’s in India. IPO’s in India has provided more than 67% returns if one has invested in all IPO’s in 2013. Creating such excellent wealth in the short term is possible only by investing in stocks and IPO’s. In this article, I would provide insights about the IPO’s which came in 2013, how they performed and how one would have earned more than 67% by investing in IPO’s.
IPO Investments in India in 2013
Investors always look for best investment options which give quick and high returns. Investment in stocks in the secondary market has always been risky.
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The alternative to this, is investing in Initial Public Offering (IPO). Initial Public Offerings (IPO) generally help investors in choosing a stock for investment and provide good returns in the short term during listing gains and investing them for medium to long term.
- I personally invested in Repco Home Finance Ltd where I recommended to buy on this blog and the IPO is 100% up as of last week.
- My other recommendation to buy during Sep-13 was RJ Biotech which gave returns of 64%. With a minimum investment of Rs 120,000, one would have made a profit of Rs 77,000 in this scrip.
- My last recommendation was during Dec-2013 to buy Capitan Poly IPO. The returns in 1 month are 17%.
- Some of the IPO’s have made 300%+ returns where I have NOT recommended to buy. Investors are also investing in companies which have not been doing well or its Financials are not attractive. Their main objective is to get listing gains.
Highlights of IPO's performance in India from Jan-13 to Dec-13.
1) There were 27 companies which came for an IPO from Jan-2013 to Dec-2013 including SME IPO’s. These do not include any FPO’s.
2) IPO’s have yielded good returns to the investors. The majority of them are trading at a price which is higher than the issue price.
3) There are 6 IPO’s which are trading below issue price. OneSource Tech, Silver Point and Alacrity Securities, Stellar Capital, Mitcon consultants, Tentiwal Wire have incurred loss to the investors. They are trading at below the issue price (loss of 36% on average).
4) Assuming that an investor have invested minimum investment required for the IPO in all these 24 IPO’s, investment value would have been Rs 30.18 lakhs and they would have made a profit of Rs 20.31 lakhs in the last 12 months. This indicates 67% simple returns in a 12 month period.
5) Though there are several brokerages recommend not to invest in specific IPO’s, investors have been investing in IPO’s to earn profits from listing gains. Though this strategy might be good for listing gains, you cannot hold IPO’s which are not attractive for short to medium term. The classic example is Onesource Tech which lost 53% from its issue price and Alacrity Securities which lost 48% of its issue price. Hence you should be little careful while choosing.
Performance of IPO's are indicated below
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Conclusion: IPO investments in India have been given good returns in the last 2 years. However one should not forget about IPO investment performance in 2011 where investors had suffered heavy loss by investing in IPO’s. Investing in good IPO’s would always benefit in the long run even in case of negative market sentiments. I keep reviewing all upcoming IPO’s at least 2-3 days before their start date of issue. Keep reading them and invest in best IPO’s to gain in this year of 2014.
Readers, Have you invested in any of these IPO’s and made good profits?
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How investors created wealth by investing in IPO’s in 2013
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Hello Suresh Sir,
Minimum how much amount is required to invest in IPO?
Vikas, Generally Non SME IPO’s, you may invest even Rs 100 shares (< Rs 10,000). However SME IPO's have a entry barrier that you should invest Rs 1 Lakh to Rs 1.5 Lakhs depending on the IPO.
have read with interest your ipo postings.
I have never invetsed in ipos myself. how do you go about it?directly or thru banks? does one get dividends just as in shares? how do you sell it if it is at a loss? can u pls include it in suggest a topic and write a full article?
Hi Vinod, It would be through demat account. When you log into your demat account, you can click IPO option and request for purchase. These would be alloted as per prescribed time limit or money would be refunded in case there is over subscription. You can sell or buy more like any other stock which you do in demat account. You can post on suggest a topic on exact requirement, I can do it in coming weeks.
Thanks for sharing the IPO data with your recommendations for 2013. By seeing the data, I observed that, for some of the successful IPOs, you have given 'AVOID' / 'Newtral' recommendations. Any reason why these IPOs became so successful.
Ravi, You have asked me a tough question. I would try to answer. I recommend based on fundamentals, grading, past performance, peer comparison and future of the industry in which company is operating. For Just Dial I said buy at lower price band as though company looks good, but its price is expensive. But there was good demand at high price band. Now the stock is 150% up. Similarly SME IPO’s are riskly. You need to invest Rs 1.2 L to Rs 1.5 Lakhs per SME IPO. Past performance of revenues are good, but profits are very thin. If you observe, I would consider all these parameters and issue price too. Based on the performance of 2012 and 2013 IPO’s, investors do not have time to do analysis, looks they are just investing. They want to take gain from listing gains. These IPO’s would do well in the current bull run, but really take beating when market crashes. I can indicate that such crash can be even up to 90% of their current price. But when you invest in fundamentally strong companies, during market crash or bear run the downside would be there, but it would be on limited side.
I've been watching all your IPO articles and posts. You gave better judgement on investing for most of the IPO's for novice investors like me. Hope you will do the same on this new year 2014, and waiting for the best IPO's.
The same way could you make us clear on IPO Vs FPO ? when you are free..
Finally last but not the least .. I Wish you a very Happy and Prosperous New Year ahead. 🙂 🙂 🙂
Thanks Kishore for your appreciation. Will do my best and wish you a happy new year too.