Come, Join The IPO Party

Be careful not to get a hangover. There are highs, and profits to be made. But the path to the riches is full of obstacles. Don't seek mere listing gains, and don't get swayed by grey market premiums

- Himali Patel

Yesha Shah, a chartered accountant from Mumbai, has been burning the proverbial midnight oil, researching on companies scheduled to enter the equity market with Initial Public Offers (IPOs). Shah’s first IPO investment brought her a windfall and got her hooked into making some quick moolah. In fact, the 25-year-old has already reaped a 60 per cent return on investment from IPOs.

Her modus operandi is simple. Depending on her ability, she spends around ₹15,000 to ₹45,000 to apply for about one to three times the minimum number of shares. And she sells it off as soon as the IPO is listed at a higher price on the bourses. It is easy profit within a matter of a few days, beating the average long-term return (18-25 per cent) from equity. Shah boasts of making profits from IPOs launched by a clutch of companies, including Rossari Biotech and Mazagon Dock Shipbuilders.

Shah is among a growing community of people who are looking at IPOs as an alternate source of extra money.

Market indices have been on a relentless rise, and most large-cap stocks are beyond the reach of the majority of retail investors. An alternate option for them would thus be to invest in mid-cap stocks. However, not all mid-cap stocks have been faring well on the stock markets. Many are facing the wrath of the pandemic, leading either to their closure or a drastic deterioration in fundamentals. For a retail investor choosing the right mid-cap stock could be a daunting task, for not every investor has access to technical and fundamental analysis.