How to make money through IPO?

Updated: Apr 10, 2021

Hey friends! Do you know, most of the investors in the market make their profit through IPO listings and these people are basically called as IPO experts. I am going to share some of the practical learning with you so that you can also understand how can we successfully make money through IPO.

Most of the people are of the view that it is always beneficial to invest in IPO but it is not true. Recently we have seen many IPOs have shown bumper listings like Chem-con also, on the other hand, there are many IPOs listed at discount and are still below their issue price like Angel brooking, UTI AMC, and so on. Apart from this, There are some IPOs that gave shocks to the investor by listing at a 20-30% discount, and then even after listing keeps on falling. So, I am gonna share knowledge of some IPO experts and my own experience as well in order to avoid such kind of distressed IPOs and to learn how to make profits through IPOs.

The First Point we should think of before investing in an IPO is why actually we want to invest in that company? Maybe you are planning for a long term investment as you feel company prospects are really good for the long term future. The second reason for which most of the people invest in IPO is to get listing gains from the IPO. So, the strategy and the decision about whether to invest in an IPO or not will totally depend upon the purpose for which you want to invest. So let’s discuss strategy for both of the strategies:

  • If you want to invest with a long-term approach then the first step you should do a fundamental analysis of the company and must go through the Red herring prospectus issued by the company which most of the retail investors ignore because of lack of knowledge. If you think you are not expert enough to understand the Red herring prospectus, then there are a lot of experts in the market or you-tube which you can refer to get an understanding of the same. But make sure you are getting advice from an unbiased expert because there are a lot of paid marketing also.

So, the first thing you should do is to get an understanding of the company like what are the company’s future prospects, and do you really feel that the company has inspiring business ideas for the future. So, if you feel it is a wise decision to invest in a company and you decide to invest in a company for a long term perspective then you should not wait for last day subscription analysis to apply for a better opportunity.

Now, If you feel there will be over subscription and chances of allotment are less then you can plan that in advance and to increase chances of getting an IPO, you can open a Dem at account for all your family members in advance and apply through their account also and this will definitely increase your chance to grab a better opportunity.

Now, If you want to invest in a company and you feel the company is having good fundamentals but the media is not in favor of that IPO. In that case, operators also may try to push that listing at discount and there may be the chances the share price may go down on listing day due to panic selling in retail investors, then You should not panic in that case and if you want to invest more then you should start buying at dips. I suggest not to buy in bulk at a particular price because there may be the chances price may go more down so just keep buying at dips as we know the company fundamentals are good then we should not panic by such a temporary fall even if that fall is continuous for few months.

  • Now in case you want to go with the listing gain strategy only, then the first and most helpful analysis in this is the grey market trend. Now let me tell you in brief what actually the grey market is. Grey market is an unofficial market where a particular person offers you a premium and you will apply to an IPO through your Dem at account and whatever the profit or loss will be borne by the person who is offering you the premium. In this, the grey market investor wants to increase the chances of getting shares by applying through multiple retail investors’ account and the retail investor also get some premium amount without having any risk of loss and also without getting any privilege of enjoying the profit. So, you should keep your ears on the grey market and if the grey market is expecting premium then chances of listing gain will be probable and you may go for the company even if you don’t like the company.

Second, you should apply on the last day of the subscription and in fact last 2 hours of the application and to observe how much times that IPO got subscribed by retail investors, HNI, and most importantly the institutional investors as the institutional investors have more information and news than we have access to. Institutional investors generally apply on the last day after observing all the sentiments of markets and retail investors. So, you have to see on the last day if the number of subscriptions is high then the chances of listing on the premium are more. If there is not much demand and not much subscription then you should apply only for one lot and if it is 40-50 times subscribed, then you can apply from the Dem at account of all your family members. But remember one thing, if you are not getting an allotment, then you should avoid buying shares on the listing date as there may be profit booking in them and chances will be there of dropping down of the prices as many investors may start booking profit out of those.

So, if you got an allotment you can book profit on the listing date and if you don’t get an allotment, you should not buy on the listing date.


So, this is all about making money through IPO and I hope you will find it insightful and will be benefited from the above knowledge I have shared.

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