Like all investments, IPOs are also not risk free. However you can manage the risk by carrying out due diligence and planning.
Never follow the herd mentality. Be yourself. Remember how much
effort you make while making purchase decisions for your other needs.
Investment in IPOs is no different.
Remember to limit your investment within Rs. 100000/- if you want to
be called as retail investor. There are quotas available for retail
investors and which are not available for high net worth investors. So
do your calculations correctly.
Also remember that not all shares you are bidding for would be
allotted to you. Share allotment is based on proportionate allotment
system depending upon the number of persons who have bid for that number
of shares in which category you fall. In case of good issues, you may
get far less number of shares than what you have bid for.
If you believe that adequate disclosures were not made by the
company, you can make a complaint to the lead manager to the issue or
SEBI against the company for misleading investors.
During bull run, a number of fly by night companies tend to take
investors for a ride. Beware. Remember we are in disclosure based regime
and not merit based regime. This means that any company which meets the
requirements can come out with a public issue provided adequate
disclosures are made. So be careful about such operators.
Plan for a long term investment. Good investment for a longer period of time will give decent returns.
Not all issues coming with huge premiums are good and not all issues
coming with low premiums are inexpensive. Pricing is an important factor
and need to be considered carefully.
