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important points to remember before applying for an IPO (Initial Public Offering):

 

Here are the important points to remember before applying for an IPO (Initial Public Offering):

✅ Checklist Before Applying for an IPO

1. 🧾 Understand the Company

  • Read the Red Herring Prospectus (RHP).
  • Know the company’s business model, revenue sources, and growth potential.

2. 📊 Check Financials

  • Review the company’s profit/loss, assets, liabilities, and debt levels.
  • Prefer IPOs from companies with consistent profits and low debt.

3. 🧍‍♂️ Promoter Background & Management

  • Look at promoter experience and track record.
  • Avoid companies with weak or controversial management.

4. 💰 IPO Valuation

  • Check if the IPO is reasonably priced.
  • Compare with listed peers (if any) using P/E, P/B, EV/EBITDA ratios.

5. ⏫ Use of IPO Proceeds

  • Check why the company is raising money — growth, debt repayment, or exits?
  • Avoid IPOs where money is mainly used for promoter exits.

6. 📈 Grey Market Premium (GMP) (Optional Indicator)

  • GMP can hint at market sentiment, but it's not always reliable.
  • Don’t depend solely on GMP for decision-making.

7. 🧑‍💻 Subscription Levels

  • Higher QIB (Qualified Institutional Buyer) and NII (HNI) interest = positive signal.
  • Keep track of daily subscription data.

8. 🕒 Listing Gain vs Long-Term Investment

  • Decide your objective: quick listing gains or long-term holding.
  • Some IPOs offer gains on listing day; others perform better long-term.

9. 📅 Lot Size & Investment Amount

  • Know the minimum lot size and price band.
  • Apply only what you can afford to lock in for a few days.

10. 🔐 Demat Account & UPI

  • Ensure your Demat account is active and linked to a valid UPI ID.
  • Check UPI mandates promptly after application.

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