Contact Your Financial Adviser Money Making
MC
20Th July 2016
 |
IPO (The Total Investment & Insurance
Solutions)
|
Ever since the FERA (Foreign Exchange
Regulation Act) dilution issues of end-1970s, retail investors have believed
that applying for initial public offerings (IPOs) of companies is the best way
to start equity investment. Strangely enough, 25 years after India scrapped
controls where government decided the listing price, investors cannot get over
the temptation to plonk money in IPOs. The memory of losses in 1992-93 (IPO
mania), 2000-01 (dotcom bubble) and the 2007-08 (big global Bull Run) is
quickly forgotten after a string of positive listings. The Total Investment & Insurance Solutions
Last week’s mega listing of Quess Corp, whose
Rs 400 crore IPO was oversubscribed 144 times and listed at a 58% premium to
offer price, has got people’s eyes gleaming again. The Quess success comes
after a spate of positive listings such as those of Mahanagar Gas, Ujjivan,
Thyrocare Tech, Dr Lal PathLabs, Alkem Labs, TeamLease Services, etc. Should
one explore IPOs again? Which ones should we invest in? These questions are
being asked again, and it is time to reiterate Moneylife’s view on
IPOs. The Total Investment &
Insurance Solutions
We believe that there will always be a few
lucky breaks when it comes to IPO investment; but, as an investment product, it
is not worth the risk. This is because the promoter and the investment banker
fix a price and time to maximise their own gains. This cannot possibly be good
for the buyer; moreover, an IPO that leaves money on the table is considered
mispriced. IPOs are also prone to hype, manipulation and dubious practices,
since there are many gainers from a successful listing. The truth is that smart
investors looking for long-term value can succeed only by carefully chosen
stocks at a reasonable value and not by chasing IPOs based on pumped-up offer
documents and a few successful listings.
The Total Investment & Insurance Solutions
No comments:
Post a Comment