NEW DELHI: Mukesh Verma, a young advertisement professional and a first-time investor, was looking to invest in the equity market, when his financial advisor suggested that he invests in the IPO (Initial Public Offering) of Indian Railway Catering and Tourism Corporation (IRCTC). He followed the advice last month and reaped a rich dividend, when his investment of Rs 32,000 almost doubled in about 31 days.
The IRCTC made its market debut on October 14 with shares listed at `644 on BSE against the issue price of Rs 320, a jump of 101.25 per cent. The Rs 645-crore IPO of the mini-ratna firm was subscribed almost 112 times, making it the most successful share sale in recent times. This also happens to be best subscribed IPO for a state-owned entity.
“This was my first investment and it was worth taking a risk. About 206 per cent return in a month is more than what I expected out of it,” Verma said, who exited it at 981, again on the recommendation of his financial advisor.
Experts claim that if selected judiciously, IPOs are the best bet for first-time investors, and can give good returns even in a bearish market.
In the last one year, the IPO index saw a massive 49 per cent growth. The Sensex and Nifty50 rose 15 per cent and 13 per cent respectively. Apart from IRCTC, which was the best performing IPO in 2019, almost all the IPOs launched this year so far have given good returns, barring MSTC and Sterling & Wilson Solar, which gave negative returns.
In the next six months, about 10 major companies are likely to hit the primary markets, including Bajaj Energy, PNB MetLife India Insurance, Reliance General Insurance and Emami Cement.
“Investing in IPO is a different ball game all together. Investing in the right IPO can give very good returns, irrespective of the general mood of the stock market. The key is to evaluate pricing, company fundamentals and knowing when to exit the stock, depending on long-term and short-term goals of the investor,” said Rohit Sharma, a personal finance advisor with HDFC Securities.