🔍
IPO Investing Strategy 2021 | How to invest in IPOs on your broker account? | Ankur Warikoo Hindi - YouTube
Channel: unknown
[0]
What is IPO investing?
[2]
Zomato’s IPO has been launched,
[4]
should you invest in it or not?
[5]
And if yes, then how to invest?
[8]
We’ll get to know in this video.
[19]
Friends, IPO investing is a very interesting
[22]
form of stock investing. Whenever you buy stocks
[25]
you do not buy the stock from
[28]
the company, you buy it from a person
[30]
who has already bought this company’s stock,
[33]
That is usually called a secondary market.
[36]
IPO is a different approach.
[38]
In an IPO, company offers the shares in the
[41]
share market, and through that people like
[48]
you and I buy that company’s stocks.
[53]
This is done for the first time ever in the
[56]
company’s history, and that’s why it is called a
[59]
Initial Public Offering or IPO
[63]
I have received many emails in the
[65]
last week saying, ‘Sir, Zomato’s IPO is out,
[67]
should we invest in it or not?’
[70]
I will break it down for you, of why is it a
[72]
good way of thinking about stock investing,
[74]
why it may not be the right way,
[76]
depending on where you are.
[78]
We’ll discuss a bit about Zomato’s IPO.
[80]
I don’t want to make this video about Zomato’s IPO.
[83]
I have my own view on the IPO, I will share a
[86]
bit with you, but please take your own informed
[89]
decision. I am not a financial advisor.
[91]
But if you want to buy an IPO,
[93]
then how can you buy it through Zerodha,
[97]
is something that we will walk through as well.
[99]
Firstly, are IPOs a good way of investing or not?
[102]
The great thing is that till now you did not
[105]
even have the opportunity to
[106]
buy this company’s stock.
[108]
Let’s say, you order in a lot from Zomato
[110]
and you think
[111]
this company is earning
[113]
so much from me, I wish I could be
[115]
a part of this company’s growth’.
[117]
If that was the case, there was no option
[120]
before this, for you to do that.
[120]
And secondly, since the company is launching
[123]
this stock for the first time, you are actually
[126]
betting on the future of the company.
[128]
So, if you feel a company is launching an IPO,
[131]
whose future is very bright, it’s in a good market,
[134]
management team is good, growth has been good,
[137]
so on and so forth, then you can actually
[140]
buy it at an attractive price, because technically
[142]
IPO is the lowest price at which that
[145]
company is ready to give its stock to you.
[147]
Yes, the stock price might go down after this too,
[150]
that is always a possibility, which is the
[153]
bad part which we will talk about,
[154]
but in a way, it is the cheapest way for you to
[157]
get in to the future potential of the company.
[162]
Third is, if you look at it historically,
[166]
then there are many short-term gains in IPO.
[169]
For example, I’m on moneycontrol.com right now,
[172]
and the historic table of IPO,
[174]
and this is sorted by the latest IPO.
[177]
The latest IPO was launched by Nazara company
[180]
on 30th March, it is a gaming company.
[183]
It was launched at ₹1101.
[188]
The very day that it was launched
[194]
it went up to ₹2000, and ultimately it closed at 1576.
[204]
Which means that if you would have
[207]
bought this stock for ₹1100 on that day,
[210]
and sold it for ₹1970, then you would have
[215]
doubled your profit in that same day.
[217]
If you would have sold it even at the end of the day,
[220]
then at 1576 means you would
[222]
have got a gain of around 50%.
[225]
Broadly, if you see the whole list,
[228]
I’m scrolling it slowly, you’ll see
[231]
there more positives than negatives.
[233]
So by and large, if you see
[237]
the IPO history, then the short-term gain,
[238]
the say the stock is listed, which means
[241]
you have bought the stock, and then the
[243]
stock is going into the market for the first time,
[245]
and then people can start buying and
[248]
selling in it, just like we buy/sell normal stocks
[250]
of any other company, so how much
[254]
gain can you make that day,
[256]
by and large it is positive, which is why
[259]
an IPO is a great thing to invest in.
[262]
Now, what are its disadvantages?
[264]
Disadvantages are, firstly, you do not know
[267]
anything about this company. Since it has
[270]
never traded in the public market,
[272]
its stocks have never been listed, company
[275]
is sharing its financials for the first time,
[278]
and for that too you have to rely on the
[280]
company if they are right, it’s their decision
[283]
of how much historic data do they want to share,
[286]
maybe they shared only for last 2 years
[288]
instead of 5 years, so on and so forth.
[289]
So, there are many things which you
[291]
do not know about the company,
[293]
so you are betting on something which
[295]
you do not understand fully.
[298]
That’s problem number 1.
[300]
Problem number 2, whatever money you
[303]
want to invest in IPO, it’s not necessary
[305]
you get that much allocation also.
[307]
What is allocation?
[308]
That’s something that we will understand clearly.
[310]
When IPO date is launched, which is
[312]
14th-16th July in Zomato’s case, people commit
[315]
towards this IPO between 14th-16th July.
[321]
Basically they say, ‘I’m ready to invest X rupees
[325]
to buy this IPO’. At the end of 16th July,
[330]
Zomato will see how much commitment it got.
[334]
If this
[335]
commitment goes to 1000 crores,
[337]
which means a lot committed to it,
[340]
then it would mean that whoever committed
[343]
will not get the allotment they asked for.
[346]
If I committed for ₹100, then I would
[349]
get shares worth ₹100. Why?
[351]
Because people committed 1000 crores
[353]
to buy shares worth 500 crores, so now
[356]
everybody would get only 50% allotment.
[359]
Which means that out of the ₹100
[361]
that I allotted, I would get only ₹50.
[364]
And what happens is, over-subscription.
[367]
The biggest problem in IPO is of over-subscription,
[371]
because if it gets over-subscribed,
[374]
then it means you will get much less that
[377]
what you wanted to invest.
[380]
So, that’s the negative of an IPO.
[383]
But keeping these both in mind,
[386]
the question I would want to answer today is,
[388]
whether one should buy Zomato’s IPO or not?
[391]
This video is not so much about Zomato’s IPO,
[393]
as it is more about IPOs in general,
[395]
but since we are talking about Zomato,
[398]
I can give you my point of view.
[399]
First of all, how many shares is Zomato giving?
[403]
If you can see on the screen, total IPO size
[406]
is 9375 crores, in which 9000 crores is primary,
[410]
which means new shares will be added
[414]
to the company worth 9000 crores,
[416]
and shares worth 375 crores are
[418]
secondary shares, which are by InfoEdge,
[421]
parent company of Naukri.com, they are
[423]
shareholders in Zomato, they are selling
[425]
their shares worth 375 crores,
[428]
which is why it is called secondary.
[431]
Price band is ₹72-76, which means,
[434]
when you commit, and we’ll see in a bit how
[436]
to commit, then you will commit for which
[439]
price you want to bid for between
[441]
₹72-76 and for how many shares.
[446]
So, you can say, ‘I want 100 shares and
[450]
I think ₹72 is the right price’, then you would
[453]
be committing ₹7200, or you say,
[456]
‘I want 1000 shares at ₹76, because I think
[460]
it will be this much’, then you would be
[462]
committing 76000, which 76 into 1000 shares.
[465]
So, that is the first thing.
[467]
Second,
[469]
By the way, this is quite a big IPO size,
[472]
9375 crores is a really big amount. 7500 crores
[476]
is equal to a billion dollars, so this is
[479]
more than a billion dollars also.
[480]
Second, Zomato is still not a profitable company.
[484]
If you will see their financials, then you
[486]
will see that in 2018, the total income
[490]
of Zomato was 4870 million rupees,
[497]
so if you cut this then it is 487 crores.
[501]
In 2019, it went up to 1400 crores and
[505]
in 2020 it is around 2700 crores.
[510]
But if you see the loss, which is
[513]
adjusted EBITDA, then in 2018 it was 78 crores,
[518]
in 2019 it was 2100 crores,
[522]
and in 2020 it was 2200 crores.
[525]
Which means loss of 2200 crores.
[530]
Now after this you can say,
[532]
‘Why should I even invest?’
[533]
In fact, you can even say,
[535]
‘Who permitted a loss-making to launch an IPO?’
[538]
So, the government rule is very clear, it says,
[541]
if you are a profitable company, then
[544]
whatever is your issue size, which is 9375 crores
[547]
in Zomato’s case, you can safeguard or
[551]
allot 35% of it for retail investors like you and I,
[557]
but if you are a loss-making company,
[560]
then you can allot only 10% to retail investors.
[564]
Remaining will go to only institutional investors.
[567]
Normal individuals like you and I cannot buy it.
[571]
This is what is happening in Zomato’s case.
[573]
Only 10% is available for retail investors
[576]
in a loss-making company.
[577]
Basically, government wants to protect
[580]
retail investors, so we will allow them
[582]
only 10%, because they cannot get carried
[587]
away, and since this is a loss-making
[589]
company, so anything can happen.
[590]
Now, the final section, if you want to invest,
[593]
then how will you do it?
[595]
I use Zerodha for this, it is my preferred
[598]
brokerage account. I do all my stock investing
[600]
through it, so if you do not have
[602]
Zerodha account, then you can create its
[605]
account by the link given in the
[607]
description and the comment.
[609]
Filing an IPO through Zerodha is
[611]
very very very simple, and I will
[613]
show you how it’s done.
[614]
Alright, I want to show you, how you apply
[617]
for Zomato IPO through Zerodha.
[620]
Basically, search on Google, Zerodha Zomato IPO,
[623]
and this is the page that you will land in.
[626]
When you click on ‘Apply now’ here,
[628]
if you would already have a Zerodha account,
[630]
you will log in and you will reach
[632]
the page where all the IPOs are there.
[635]
You will look for Zomato, it has a ‘apply’ status,
[638]
start date is 14, which is today, end date is 16th July,
[642]
which is after 2 days. Price range is 72-76, which means,
[646]
you can bid for the stock between ₹72-76.
[650]
I will tell you what is a bid. Minimum quantity
[653]
is of 195 shares, so this is the important piece.
[656]
Now, if I click on ‘apply’, it will show
[659]
you all the details that are required.
[661]
Let me bring this here, ok.
[664]
It will show you all the details that are required.
[666]
So, issue opens on 14th July and end on 16th.
[670]
Number of shares, 71.92 crore shares are available.
[675]
Between the range of ₹72-76.
[677]
Lot size is of 195, which means you cannot
[681]
buy 1 share, you will have to buy minimum 195 shares,
[685]
or in its multiples, there is no discount, nothing.
[689]
Red Herring Prospectus is very important friends,
[692]
so please before subscribing and investing,
[696]
read the Red Herring Prospectus carefully.
[700]
This is basically, the document that will tell you
[703]
everything that there is know about the IPO.
[706]
So, you come here, and first of all for this,
[709]
you have to give your UPI ID.
[711]
That UPI must have money. Most importantly,
[713]
that UPI should be linked with that bank account
[716]
which is your Zerodha bank account.
[719]
You cannot do it with any other UPI,
[721]
because if there is a mismatch,
[723]
then it will not go through.
[725]
You are an individual investor because
[727]
we all are individual investors.
[728]
And then, there are these 3 options.
[731]
Now, what are these 3 options?
[733]
Friends, IPO is a bidding process,
[735]
which means that the price range that you here,
[738]
72-76 in the case of Zomato, you bid on it
[741]
or auction that, ‘I want this many shares at ₹72’,
[746]
or, ‘I feel ₹72 is very less, everyone must
[749]
be bidding at 76, so I want this many
[752]
at 76 or anywhere in between’.
[755]
So, you get 3 bids from the exchange.
[759]
For example, since 195 is minimum,
[762]
so if I do for myself, then next is 390,
[764]
then 585, then 780, so on and so forth.
[768]
So, let me say 195, and I will say cut-off price,
[772]
I want to buy 195 shares at ₹76.
[777]
The other one I can do is 195,
[780]
but now I want to buy this at ₹72.
[784]
And then I will have another one,
[786]
which is let’s say 390, and I want
[789]
to buy this at ₹75, right?
[792]
So, you will have these 3 bids.
[795]
You can make any bid.
[797]
If everyone, which you don’t know,
[799]
but if everyone bids on the cut-off price,
[802]
then for whatever value you would have
[805]
bid for not at the cut-off price but lesser than that,
[809]
then you will not get an allocation.
[811]
Let me say that once more,
[812]
because it gets a bit complicated.
[814]
What you are saying basically is,
[816]
that I want to bid for these many shares
[819]
at this price. If the whole world bids at ₹76,
[823]
but you made a bid at ₹75, then the world
[827]
would get the allocation but not you.
[829]
Why?
[829]
Because obviously Zomato wants to make
[831]
as much money as possible, that’s why if
[835]
everyone bids at 76, then it would allocate
[838]
everyone at ₹76 only, it won’t go down to 75.
[841]
That is how it works so that’s why,
[843]
always make one bid at cut-off price.
[846]
Whatever would be the maximum amount,
[848]
like 390 into 75 comes to 29,000,
[852]
so that much should be there in your UPI account.
[855]
You will have to first check this, and then say ‘submit’.
[858]
When you say ‘submit’, basically
[860]
Oops! It’s showing error processing, because I
[864]
think it’s only 10:07AM, it has just launched
[867]
7 minutes back, so there must be a high load.
[872]
Ok, but let me just walk you through this
[874]
entire journey because we’ll have to wait for this.
[876]
When you do this and it gets passed through,
[879]
you will get a mandate request on your UPI app.
[882]
Basically, a request for the payment.
[884]
It will come by 12, if you are doing it in that
[887]
same day itself. When you make that payment,
[891]
then it will be blocked in a way.
[893]
At the end of the day, and this is what
[896]
you can see, right? You can accept the
[898]
UPI payment till noon, if you don’t receive
[900]
the UPI request till the end of the day
[902]
due to delays from the bank,
[904]
please delete and apply again.
[906]
So you will have to apply again,
[907]
and the way that it will work is,
[909]
once the money gets deducted,
[911]
the money gets parked.
[913]
After 16th July, allocations will be
[916]
decided and announced. It will then
[918]
say that you’ve got this much.
[921]
So from the ‘Status’ here, you will
[924]
basically get to know what has happened.
[927]
When will be allotment finalisation?
[929]
When will be refund initiation?
[931]
Because whatever you would have paid,
[933]
it’s not necessary that all of it would be used.
[935]
You may less allotment. You wanted to
[937]
buy 195 shares but you got only 100,
[941]
then you will be refunded for the remaining 95.
[944]
Then it will be transferred to your Demat,
[946]
and it is getting listed on 27th July,
[949]
that is how it basically will work.
[952]
This is the process through
[953]
which you apply for an IPO through Zerodha.
[955]
I wish I could show it to you in completion.
[958]
Let’s try once more and see if this can work.
[961]
So 290, I have put in the cut-off price.
[963]
I ‘ll do this, submit, ok awesome!
[968]
UPI request from the bank might be delayed.
[970]
Accept to apply whenever you receive
[972]
might take end of the day. Cool?
[974]
So, as I said, as you receive the mandate,
[977]
all you will have to do is just make that payment.
[979]
That payment will be blocked or reserved,
[982]
and when the allotment happens basis
[984]
you bids, you will get some refund if applicable,
[988]
rest of the money will go towards
[990]
buying the shares.
[991]
After that you would be able to see
[993]
your shares in your brokerage account,
[995]
and on the 27th, when the stock will list
[998]
of Zomato, you can sell those shares or
[1001]
you can buy more shares if you want.
[1004]
That is how an IPO works.
[1006]
I hope this was useful.
[1008]
As you saw, we invested in Zomato’s IPO
[1010]
through Zerodha. It was very very simple,
[1013]
very startighforward. Now like I said,
[1015]
it’s not necessary that we will be allotted
[1017]
all of what we committed for,
[1019]
because it depends on the over-subscription.
[1022]
The more the people will subscribe,
[1025]
the lesser we will get allotted, because
[1028]
the issue size of 9375 crores is fixed.
[1032]
Broadly, IPO is a great way to make short-term money,
[1035]
long-term investment is also possible,
[1038]
but frankly for that, you don’t have to
[1040]
buy in IPO. You can buy whenever the stock price
[1042]
goes down or when you have the money.
[1046]
But IPO is a great way for you to unlock
[1049]
short-term gains and make happy money.
[1052]
I hope this was useful.
[1053]
If you have any question on Zomato’s IPO
[1055]
or in general, on IPO investing, then please
[1058]
don’t forget to ask me in the comment section.
[1061]
Ankur Warikoo, signing off!
Most Recent Videos:
You can go back to the homepage right here: Homepage